According to an invoice filed Thursday, federal officials told a former Coinbase employee and two other men in an insider transaction containing confidential information about crypto assets that were about to be posted on Coinbase’s exchange. He has filed criminal and civil suits against him.
According to a federal prosecutor in Manhattan, the three men used information on Coinbase’s 14 listings to engage in transactions for more than a decade, generating an illegal profit of about $ 1.5 million. 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 is the first time authorities have 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 Nikhil Wahi and his brother’s friend Sammer Ramani said they had passed confidential information.
Authorities said Nikhil Wahi and Ramani used that information to buy assets before Coinbase announced it 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 post on Twitter about anomalous transactions.
Ishan Wahi booked a flight to India just before the company interviewed him in an investigation. Officials said he also turned over his brother and his brother’s friends for the interview. Wahhi and his brother were arrested Thursday morning in Seattle. According to officials, Mr. Ramani was still in the majority.
Ishan Wahi’s lawyer said their clients were “innocent of all misconduct and willingly protect themselves from these accusations.” His brother’s lawyer did not immediately respond to the request for comment. He couldn’t immediately ask Mr. Ramani for comment. The SEC said Mr Ramani lives in 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, a federal prosecutor filed a lawsuit on insider trading involving the purchase of another type of digital asset, non-fungible token, or NFT using sensitive information. In that case, authorities have 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 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.
In an interview, Coinbase Chief Legal Officer Paul Grewal said there was a team of 50 investigators, including a former federal prosecutor who oversaw suspicious activity on the platform. “These signals we are looking for are very weak in very loud and complex systems,” he said.
The reason for Mr. Wahi’s investigation Tweet From an account named Cobie that used public transaction records to identify suspicious transactions.
Account — when billed on Thursday It is reportedly run by crypto influencer Jordan Fish. — It was a modest tone.
“It’s confusing for people to actually read tweets from this Twitter account in the real world and then do something about them,” Coby wrote.