According to an invoice filed Thursday, federal officials told a former Coinbase employee and two other men in an insider transaction case containing confidential information about crypto assets that were about to be posted on the Coinbase exchange. We have filed criminal and civil suits against us.
According to a federal prosecutor in Manhattan, the three men used information on Coinbase’s 14 listings to engage in a 10-month transaction, generating about $ 1.5 million in illegal profits. The man was charged with three charges: wire fraud and a conspiracy to commit wire fraud.
Damian Williams, a federal prosecutor for the Southern District of New York, said this was the first time authorities had filed a criminal accusation of insider trading related to crypto assets.
Prosecutors and the Securities and Exchange Commission on Civil Claims said Ishan Wahi, who was a member of the Coinbase team that listed assets on the exchange at the time, about when some crypto assets will be listed. His brother Nikil Wahhi and his brother’s friend Summer Ramani said they had passed confidential information.
According to officials, Nikhil Wahi and Ramani used that information to buy assets before announcing that Coinbase would go public. After the announcement, the man sold his property for profit.
The alleged scheme was revealed after Coinbase launched an internal investigation in April in response to a Twitter post about anomalous transactions.
Mr. Ishan Wahhi booked a flight to India shortly before being interviewed by the company as part of the investigation. Officials said he also turned over his brother and his brother’s friends in the interview. Mr. Wahhi and his brother were arrested Thursday morning in Seattle. According to officials, Mr. Ramani is still in large numbers.
Brother Wahhi’s lawyer did not immediately respond to the request for comment. He couldn’t immediately ask Mr. Ramani for comment. The SEC said Ramani is a resident of Houston but believes he is in India.
The accusation suggests that federal authorities are ready to crack down on illicit transactions in the digital asset world in much the same way they pursued such crimes in the equity, fixed income and commodities markets. ..
“Our message on these accusations is clear. The scam is a scam, whether it happens on Blockchain or on Wall Street,” said Williams, a US lawyer.
The SEC said crypto assets listed on Coinbase’s exchange are considered securities and could be regulated like stocks and bonds. This is the stance that much of the world of digital currencies opposes.
Last month, federal prosecutors filed an insider trading lawsuit involving the purchase of another type of digital asset, non-fungible token, or NFT using sensitive information. In that case, authorities charged a former employee of the NFT Marketplace for misusing sensitive information about the timing of the public list of digital tokens.
“The two cases are just the beginning of DOJ’s crackdown on insider trading in crypto space,” said Ian McGinley, a former Justice Department prosecutor. “Both of these cases are relatively small, but the DOJ brought them to send a message — they are watching.”
and Position On Coinbase’s website, the company’s CEO, Brian Armstrong, said Coinbase had handed over information about the three men to the Justice Department and ended Wahi’s employment. “We do not tolerate this kind of illegal activity at all and do not hesitate to take action against our employees when we find fraud,” he writes.
