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Ethereum vs. SEC: Implications of Wahis’ insider trading settlement on ETH



  • The US SEC settled with Nikhil and Ishan Wahi on May 30 after the brothers agreed to settle charges.
  • Despite the SEC win, questions arise on how the regulator will allow forfeiture of those digital assets legally and lawfully.
  • Ethereum is at the top of this deliberation, with Gensler telling House Financial Services Committee that the agency was still learning ETH. 
  • Notably, a statement from the regulator declaring ETH a commodity is much awaited by the community and could help prices.

Ethereum (ETH) is the subject of a new controversy, with the second-largest crypto finding itself in the rut after the United States Securities and Exchange Commission (SEC) settled its insider trading case against the Wahi brothers.

Ethereum could become an issue for the SEC after the case settlement with the Wahis

Ethereum (ETH) and the SEC are now attached to the hip after the federal regulator settled with Ishan and Nikhil Wahi. As reported, the two defendants agreed that their actions violated Section 10(b) of the Securities Exchange Act, with Ishan facing two years in prison while his brother, Nikhil, will serve ten months behind bars.

The regulator also indicated that the ex-Coinbase product manager agreed to surrender 10.97 ETH and 9,440 USDT, while Nikhil forfeited 892,500 USDT to the State, nearly $922,518.73 in total based on current rates. The funds are part of the settlement and forfeiture of securities, which the regulator described as “ill-gotten.”

Notably,  the settlement came almost a year after the regulatory agency filed the suit at the District Court for the Western District of Washington, summoning the former Coinbase product manager of leveraging confidential information to benefit from trading crypto assets, with about nine of them being securities, allegedly.

Ethereum handling moving forward

Following the SEC’s win against Ishan and Nikhil Wahi, questions have emerged over the position of Ethereum in the eyes of the agency. Specifically, there are concerns over how the Securities and Exchanges Commission will allow the surrendering of those digital assets, with a special interest in Ether, without contravening what the agency considers legal and lawful.

The controversy becomes even more confusing given that SEC chair Gary Gensler failed to clarify during his recent expressions whether ETH, like Bitcoin (BTC), is a commodity that should be treated as a property and its capital gains taxed. According to market participants, Gensler ought to have made it clear whether Ethereum should be treated as a property of its capital gains tax.

During his statement before the House Financial Services Committee, the agency chair echoed that the agency was learning more about the second largest crypto by market cap, Ethereum. Notwithstanding, the ambiguity could help Ethereum price to move higher because an open endorsement from the SEC, which is the main regulator, could inspire regulatory clarity, potentially pumping ETH price and its on-chain activity.

Notably, however, the SEC’s position varies from that of the Commodity Futures Trading Commission (CFTC), which has classified Bitcoin, Ethereum, and Litecoin (LTC) as commodities instead of securities.

Nevertheless, the crypto community eagerly awaits the SEC to issue a statement proclaiming that Ethereum is a commodity. Such a declaration could boost prices for ETH and other coins as such regulatory decisions tend to have a bearing on more players than one. Meanwhile, we also continue tracking the late 2020 case between the SEC, Ripple (XRP), and its officials, where the former accused the latter of selling unregistered securities, XRP tokens. As reported recently, we expect this ruling in a few months.


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