Cryptocurrency News

Coinbase Case: US Court Determines Cryptocurrency Trades Are Securities

2 min read
Coinbase Ceo Brian Armstrong


An American judicial body determined that the exchange of cryptocurrency assets via online services such as Coinbase is legally considered the dealing of securities.

Coinbase CEO Brian Armstrong

The verdict came to light during proceedings against Ishan Wahi, an ex-product manager at Coinbase, who admitted to passing on non-public information for profit through cryptocurrency investments, along with his sibling Nikhil Wahi and their companion Sameer Ramani.

In particularly noting Ramani’s conduct, the court underscored that transactions in secondary markets for crypto tokens amount to investment contracts per the Howey test. This was brought into focus through a default judgment versus Ramani who is believed to have fled the country, seeking to avoid criminal charges that involve insider trading.

This legal disposition aligns with prior decisions and has significant implications for the trade and regulation of digital currencies, especially in light of the Securities and Exchange Commission’s (SEC) resolution with the Wahi brothers back in May 2023. The latter represented the first insiders trading lawsuit in the realm of cryptocurrency. The verdict against Ramani marks a pivotal moment by challenging the viewpoint held by some in the crypto sector, including companies like Coinbase, where they argue that cryptocurrencies are not universally considered securities and thereby should not be regulated by the SEC. SEC Chairman Gary Gensler has been vocal in maintaining that the majority of digital assets serve as securities and that trading platforms should register with the SEC.

By determining that cryptographic currency transactions are akin to securities transactions, the court’s decision reiterates and amplifies the discussion concerning the governance and control of digital currencies. In addition to barring Ramani from future violations, the judiciary commanded a civil penalty of twice the profits from his misconduct, equalling $1,635,204, and demanded disgorgement amounting to $817,602. The SEC’s plea for prejudgment interest, however, was not granted by the court.

Ishan Wahi, who previously functioned as a product manager for Coinbase, was sentenced to a 26-month incarceration period previously. He was accused of leaking confidential details to his brother and friend about impending cryptocurrency listings on the Coinbase platform.

Furthermore, identified as the sibling of the aforementioned ex-Coinbase staffer, Nikhil Wahi was directed by a court in New York to forfeit nearly $470,000 to the US cryptocurrency exchange for his role in the aforementioned insider dealing plot. After being found guilty of participating in a wire fraud conspiracy, he acknowledged his involvement in the trade of confidential information in September 2021, and was incarcerated for 10 months in January 2022.


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