Key Insights
- U.S. court orders trader to pay $2.5M penalty over Coinbase insider trading case
- Judgment covers disgorgement of $817K profits, $1.64M civil penalty for illegal crypto trades
- Concludes SEC case alleging trio profited from confidential Coinbase crypto listing leaks
NEW YORK (MarketsXplora) – A U.S. district court has ordered a trader to pay nearly $2.5 million after finding him liable for insider trading tied to confidential crypto listing information leaked from Coinbase Global Inc, federal regulators said on Monday.
The judgment against Sameer Ramani wraps up the high-profile case brought last year by the Securities and Exchange Commission, where three individuals were accused of making illicit profits by trading ahead of multiple announcements related to digital asset securities being added to Coinbase’s platform.
According to the SEC’s complaint, Ramani obtained tips between June 2021 and April 2022 from his friend, Ishan Wahi, who at the time worked as a product manager orchestrating Coinbase’s crypto listing process, treated as confidential.
“Wahi repeatedly tipped the timing and content of those upcoming listing announcements to Ramani and Wahi’s brother, allowing them to amass positions in tokens ahead of the disclosures, which typically drove up prices,” the complaint alleged.
The SEC said 25 crypto assets were purchased in advance, at least nine of them deemed securities under federal regulations.
In a final default judgment, the U.S. District Court for the Western District of Washington ordered Ramani to pay $1.64 million in civil penalties on top of $817,602 in ill-gotten gains.
Ramani was also permanently barred from future violations of anti-fraud provisions under the Securities Exchange Act.
Last month, the court finalized parallel judgments against the Wahi brothers, forcing Ishan Wahi, the ex-Coinbase employee, to disgorge $892,837 in illicit trading gains and pay a $300,000 penalty.
Nikhil Wahi paid a total of $926,388 covering disgorgement and penalties.
The trio were among the first insider trading prosecutions tied to cryptocurrency markets by U.S. regulators, after the SEC alleged insider trading violations in the listing announcements of at least 25 crypto asset investment contracts.
Several of the tokens added to Coinbase’s platform around the relevant 2021-2022 tipping period, including Cardano, Polygon and Terra’s Luna, saw their values soar after trading kicked off for retail investors.
Coinbase was not accused of wrongdoing, though the episode fueled regulatory concerns over insufficient safeguards at platforms listing and trading digital assets considered securities under federal law.
The SEC has repeatedly warned companies engaged in digital asset offerings that crypto tokens deemed securities must be registered under investor protection laws, or qualify for registration exemptions.
While insider trading remains illegal, regulators have grappled with opaque practices surrounding crypto exchange listings and addressing the application of traditional securities laws.
Some legal experts say the SEC’s case and sizes of the multi-million dollar penalties highlight its aggressive approach to cracking down on crypto industry misconduct through established rules and enforcement tools.