SEC's Settlement In Wahi Brings An End To Its Extended Securities Claim

On May 30, 2023, the U.S. Securities and Exchange Commission (SEC) settled its case against a former Coinbase employee and his brother for alleged "insider trading" of digital assets. At the heart of the dispute was whether several digital assets trading on the platform were properly regarded as "securities" under U.S. law.

In its proposed judgment, Ishan and Nikhil Wahi are to be permanently enjoined from violating Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and held liable for disgorgement of "ill-gotten gains" from the conducts at issue in the case. However, notably missing from the judgment are any admissions that the defendants engaged in securities transactions as a part of the alleged misconduct. Instead, the defendants agreed to admit the allegations as true only for purposes of exceptions to discharge under the Bankruptcy Code. The settlement brings some relief to participants in the digital asset industry, as a ruling in favor of