Judge Tana Lin partially satisfies the SEC’s request for a default judgment against Sameer Ramani in the case involving former Coinbase product manager Ishan Wahi and co-defendants. Lin also determines that some cryptocurrencies sold in secondary markets are securities.
Ishan Wahi and his brother Nikhil were charged with insider trading and wire fraud in July 2022. The trades involved tokens intended for listing on Coinbase, executed after Ishan Wahi shared information about the exchange’s plans.
The SEC requested a default judgment against Ramani, who allegedly fled the United States and failed to respond to court summonses.
Judge Lin grants the SEC’s demands for a permanent injunction against Ramani, civil penalties, and disgorgement, but excludes prejudgment interest on the disgorged funds.
The SEC claims that nine of the 25 tokens invested in by Nikhil Wahi and Ramani on Ishan Wahi’s advice were securities. Lin concurs with the SEC’s argument, stating that the tokens traded by Ramani were offered and sold as investment contracts, thus classifying them as securities.
Some legal experts criticize Judge Lin’s ruling, stating that she misstates the core holding of SEC v. W.J. Howey Co., and argue that without a contract, transaction, or scheme, there is no “investment contract.”
Coinbase’s chief legal officer, Paul Grewal, agrees with the critique, asserting that the SEC’s arguments faced no opposition in the case, and Judge Lin was bound to accept everything the SEC stated in the complaint as true.
Ishan Wahi initially pleaded not guilty but later changed his plea to guilty in a deal with the SEC. He received a two-year prison sentence, while his brother Nikhil was sentenced to 10 months. Ramani’s defense counsel and contact details were unavailable for comment.
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