"Ishan Wahi, a former product manager at Coinbase Global, Inc. (“Coinbase”), pled guilty to two counts of conspiracy to commit wire fraud in connection with a scheme to commit insider trading in cryptocurrency assets by using confidential Coinbase information about which crypto assets were scheduled to be listed on Coinbase’s exchanges." 

U.S. Attorney Damian Williams said: “Ishan Wahi – a former Coinbase product manager – admitted in court today that he tipped others regarding Coinbase’s planned token listings so that they could trade in crypto assets for a profit." "Wahi is the first insider to admit guilt in an insider trading case involving the cryptocurrency markets." DOJ Press Release  Williams added: Whether it occurs in the equity markets or the crypto markets, stealing confidential business information for your own personal profit or the profit of others is a serious federal crime." 

Wahi is the same defendant who this week filed a motion to dismiss the SEC's concurrent civil lawsuit alleging that he engaged in insider trading.The SEC alleges that Wahi used information he gained at Coinbase to tip off his brother and his college friend about tokens that were about to be listed on Coinbase. Wahi's counsel argues that the SEC's lawsuit should be dismissed because "[n]owhere has the SEC alleged that the Defendants traded tokens with the mental state necessary to establish federal securities fraud." To the contrary, nobody—neither the SEC nor the legion of sophisticated counsel advising Coinbase—considered the tokens at issue to be securities before the SEC filed this suit. Because the SEC cannot establish that the Wahi had the culpable state of mind necessary to commit securities fraud, the Amended Complaint must be dismissed." SEC Suit

The motion to dismiss also is critical of the SEC for brining a concurrent civil action given the significance of this case for the digital asset space and the fact that defendant is burdened with also having to defend a pending criminal case related to the same conduct. "An enforcement action against individual people—particularly ones who are already occupied with federal criminal proceedings at the other end of the country—is not how major questions of law that loom over entire industries should be resolved.  Yet that is how the SEC has chosen to proceed." Wahi's counsel argues that: "The legal deficiencies in the SEC’s Amended Complaint are serious, and the Court should not allow the Agency’s brute-force approach to obscure them."

"The linchpin of the Amended Complaint is that the digital assets Ishan Wahi, his brother, and the other defendant traded are “securities” under the Exchange Act. The SEC is wrong. The term “investment contract” requires—as the statute says—a contract. But here there are no contracts, written or implied. The developers who created the tokens at issue have no obligations whatsoever to purchasers who later bought those tokens on the secondary market. And with zero contractual relationship, there cannot be an “investment contract.” It is that simple." Twitter Thread