Ishan Wahi, former product manager at crypto exchange Coinbase (COIN), has agreed to plead guilty to insider trading charges, Reuters reported Tuesday.
Wahi was accused of sharing information about crypto assets the exchange would be listing, and had previously pleaded not guilty to federal charges of insider trading. Wahi changed his plea during a hearing.
Wahi's brother Nikhil pleaded guilty to a wire fraud conspiracy charge in September 2022 for allegedly profiting from information shared by Ishan Wahi regarding least 14 different listings at Coinbase. The Wahi brothers were arrested in late July, charged by the U.S. Department of Justice (DOJ).
On Monday, Wahi's lawyers had also filed a motion to dismiss a complaint by the U.S. Securities and Exchange Commission arguing that some of the crypto tokens under question in the former manager's case were unregistered securities. The motion argued the tokens were not securities and therefore Wahi is not guilty of securities fraud.
"In other words, the SEC’s allegations, taken as true, may give rise to an employee misconduct claim or some other charge; but not securities fraud," the complaint said, adding that all of the nine tokens targeted as securities by the SEC were utility tokens, which the document said is something that "by nature and design, is used on a platform rather than stored as an investment."
The SEC has until April 6 to respond to the motion. If granted, it could be a big win for the crypto industry, which has been challenging the classification of digital assets as securities.
Update (Feb. 7, 2023 15:13 UTC): Adds the motion to dismiss SEC charges of securities fraud.
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