Judge Tana Lin partially granted the United States Securities and Exchange Commission’s (SEC) request for a default judgment against Sameer Ramani, one of the defendants in the case involving former Coinbase product manager Ishan Wahi and his co-defendants. Additionally, Judge Lin ruled that certain secondary sales of cryptocurrencies should be classified as securities.
The SEC had requested a default judgment against Ramani, who appeared to have fled the United States and had not responded to court summonses. In July 2022, Ishan Wahi and his brother Nikhil were charged with insider trading and wire fraud. The trades in question involved tokens that were set to be listed on Coinbase, which were made after Ishan Wahi informed his associates of the cryptocurrency exchange’s plans.
Judge Lin, who presides over the U.S. District Court of Western Washington at Seattle, granted the SEC’s request for a permanent injunction against Ramani, as well as civil penalties and disgorgement. However, she did not agree with the SEC’s argument that the defendant should pay prejudgment interest on the disgorged funds. It is alleged that Nikhil Wahi and Ramani made $1.5 million from their illegal trades.
The SEC claimed that at least nine of the 25 tokens that Nikhil Wahi and Ramani invested in, based on Ishan Wahi’s advice, were securities. These nine tokens were Powerledger (POWR), Kromatika (KROM), DFX Finance (DFX), Amp (AMP), Rally (RLY), Rari Governance Token (RGT), DerivaDAO (DDX), LCX, and XYO. Judge Lin accepted the SEC’s argument without challenging it in her order. Patrick Daugherty, head of the Foley & Lardner digital assets practice, commented on the matter, stating:
“The judge accepted the SEC’s argument without questioning it. This decision highlights the importance of complying with securities law in the cryptocurrency industry.”
Coinbase’s chief legal officer, Paul Grewal, agreed with Judge Lin’s conclusion. He expressed that the SEC faced no resistance in the case, stating:
“The SEC was met with no opposition in this case. It was clear from the beginning that the defendant’s actions violated securities laws.”
Initially, Ishan Wahi pleaded not guilty to the insider trading charges but later changed his plea to guilty in a deal with the SEC in February 2023. He was subsequently sentenced to two years in prison, while his brother Nikhil received a 10-month sentence.
Ramani’s defense counsel, David Kornblau at Denton’s, did not respond to inquiries from Cointelegraph. The provided email address for Ramani was also unresponsive.