US Judge Approves Partial SEC Judgment in Ex-Coinbase Insider Trading Case
Summary:
US Judge Tana Lin has granted in part the SEC's request for a default judgment against Sameer Ramani, a defendant in a case involving insider trading and wire fraud charges against ex-Coinbase product manager, Ishan Wahi, and his associates. Lin also asserted that secondary sales of some cryptocurrencies were classified as securities. The fraudulent trades involved tokens set to list on Coinbase, insider tip-offs, and ultimately contributed to illegal profits of about $1.5 million. The SEC argued that 9 out of the 25 tokens invested in by the defendants were securities, a claim backed by Lin.
Judge Tana Lin has partially granted the US Securities and Exchange Commission's (SEC) bid for a default judgment against Sameer Ramani, one of the individuals implicated in a case involving ex-Coinbase product chief Ishan Wahi and some of his associates. Lin also established that secondary transactions of certain cryptocurrencies were securities. Ramani, who is believed to have absconded from the US and did not respond to court summons, had a default judgment requested against him by the SEC. Claims were laid against Ishan Wahi and his brother Nikhil in July 2022, accusing them of insider trading and wire fraud. The involved trades pertained to tokens set to be listed on Coinbase, and were conducted after Ishan Wahi had disclosed the digital exchange’s intentions to his affiliates.
Judge Lin, who is associated with U.S. District Court of Western Washington in Seattle, was in agreement with the SEC’s plea for a permanent injunction against Ramani, along with civil penalties and disgorgement, but denied the notion that the accused should pay prejudgment interest on the disgorged assets. Reportedly, alleged illegal trades made by Nikhil Wahi and Ramani totalled $1.5 million in profits.
Errors coming to light from previous convictions have sparked crypto exchanges to clamp down on insider trading. The SEC has argued that out of the 25 token investments made by Nikhil Wahi and Ramani, based on tips from Ishan Wahi, 9 constituted securities. The nine tokens include Powerledger (POWR), Kromatika (KROM), DFX Finance (DFX), Amp (AMP), Rally (RLY), Rari Governance Token (RGT), DerivaDAO (DDX), LCX, and XYO. According to Judge Lin’s statement:
“The allegations in the FAC establish that the tokens Ramani traded were offered and sold as investment contracts and, thus, were securities.” FAC could pertain to the First Amended Complaint but it wasn’t indicated in the statement.
Despite this, Judge Lin has acceded to the SEC’s reasoning, revisiting its key points in her judgment without contesting them. Patrick Daugherty, who heads the Foley & Lardner digital assets division, mentioned to Cointelegraph, “Judge Lin misquotes the fundamental ruling of SEC v. W.J. Howey Co., because she overlooks the Supreme Court’s stipulation of an 'investment contract' requiring a 'contract, transaction or scheme' (quoting the Howey case itself). Absent a contract, transaction or scheme, there simply cannot be any 'investment contract.'”
Coinbase chief legal officer Paul Grewal concurred with this view, suggesting that “the SEC was pushing against a completely open door” in this case. Grewal went on to say, “Not only is there no one pushing back on anything the SEC says, the judge is required under the applicable rule to take everything the SEC says in the complaint as true. No matter how far fetched or plain wrong it is.”
Ishan Wahi initially denied the accusations of insider trading, but later pleaded guilty as part of a settlement with the SEC in February 2023, and was given a two-year jail sentence. His sibling Nikhil was handed a 10-month sentence. Ramani's defense lawyer named in the statement, David Kornblau from Denton's, did not respond to Cointelegraph's questions by the time of print. Additionally, the email address on record for Ramani was not receiving emails when Cointelegraph tried to make contact with him.
Published At
3/5/2024 12:16:41 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.