First-of-its-Kind Crypto Insider Trading Conviction – Fin Tech

In the first insider trading case involving cryptocurrencies, a
crypto trader was convicted of insider trading in federal district
court and recently
sentenced to 10 months in prison.

The defendant, Nikhil Wahi, pleaded guilty in the U.S. District
Court for the Southern District of New York to illegally trading on
information tipped by his brother, a former Coinbase product
manager. According to his plea, Wahi used that information to trade
on 40 different kinds of crypto assets were scheduled to be listed
on the Coinbase platform between April 2021 and July 2022, when he
was arrested. Prosecutors alleged that Wahi used those tips to sell
crypto assets for a profit. Under the terms of the plea agreement,
Wahi agreed to serve ten months in prison.Wahi’s brother, Ishan
Wahi, has pleaded not guilty and is due to appear in court in
March.

While insider trading is hardly an uncommon charge, the
conviction represents the first insider trading conviction in the
cryptocurrency market – but it is unlikely to be the last.
Following Wahi’s guilty plea, the U.S. attorney for the
Southern District remarked that the sentence “makes clear
that the cryptocurrency markets are not lawless.” Indeed, ever
increasing scrutiny over the crypto industry has come from both
prosecutors- including in the infamous FTX case – but also in the regulatory
context. Just this past summer, the U.S. Commodity Futures Trading
Commission Chairman urged congressional action on crypto
regulation, while the SEC Chair Gary Gensler has been clear
that he plans to use the SEC’s powers to increase oversight of
the crypto industry, including in enforcing conflict of
interest laws.

Wahi’s conviction appears to be the latest in a series of
government actions seeking to increase oversight of the
cryptocurrency market – and deter possible criminal activity. While
his insider trading conviction follows longstanding
enforcementhttps://btlaw.com/-/media/images/btlaw/content/us-russia_detail.ashx?h=1280&w=1920&la=en&hash=F3FE70DF18A24374C28338B10F819C48
theories, the government could use novel approaches as it grapples
with how to regulate the emerging crypto industry. This possibility
underscores the important role that outside counsel can play in
helping companies and individuals succeed in the crypto market
while minimizing prosecutorial risk.

First-of-its-Kind Crypto Insider Trading Conviction

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