October 4, 2022

Coinbase Global’s former chief product officer Ishan Wahi pleaded not guilty to two counts of wire fraud conspiracy and two counts of wire fraud in a Manhattan federal court on Wednesday, according to Reuters. mentionted. Wahi is accused by United States law enforcement authorities and the Securities and Exchange Commission (SEC) of insider trading while at Coinbase. He was arrested in May as he tried to board a flight to India and charged in July.

Specifically, Wahi is accused of passing confidential information to his brother Nikhil and friend Sameer Ramani about cryptocurrencies that Coinbase intended to list for trading. This allegedly allowed them to make at least $1.5 million in profits between June 2021 and April 2022 by acquiring and trading the assets prior to their Coinbase listings. It was possibly the first insider trading case involving cryptocurrency. Nikhil Wahi was also arrested, but Ramani remained at large as of late July.

The SEC is pursuing a parallel civil case against Ishan Wahi based on the determination that nine of the 25 cryptocurrencies Wahi and his accomplice were trading — Powerledger (POWR), Kromatika (KROM), DFX Finance (DFX), Amp (AMP), Rally (RLY), Rari Governance Token (RGT), DerivaDAO (DDX), LCX and XYO — were titles. The SEC’s move proved controversial, as it led to questions about the status of stock exchanges, funds and investors holding the assets.

Related: Coinbase SEC investigation could have ‘serious and chilling’ results: Lawyer

The Justice Department did not include securities fraud among its charges in the case, and Coinbase forcibly denied that he was dealing with headlines in a blog post published after Wahi was indicted, with chief legal officer Paul Grewal writing:

“Instead of crafting tailored rules in a comprehensive and transparent manner, the SEC is relying on these types of one-off enforcement actions to try to bring all digital assets under its jurisdiction, even those assets that are not securities.”

Commodity Futures Trading Commission’s Caroline Pham also joined the fray, calling the SEC case “a striking example of ‘regulation by enforcement.’

The SEC is also reportedly looking into insider trading at crypto exchanges in an investigation unrelated to this case.