Federal authorities filed criminal and civil charges against a former Coinbase employee and two other men in an insider-trading case involving confidential information about cryptocurrency assets that were about to be posted on Coinbase’s exchange. The three men were involved in trades over 10 months using information about 14 listings on Coinbase that generated about $1.5 million in illegal profits. The men were charged criminally with three counts of wire fraud and conspiracy to commit wire fraud.
The case is the first time the authorities have filed criminal insider-trading charges involving cryptocurrency assets. The prosecutors, as well as the Securities and Exchange Commission in civil charging documents, said Ishan Wahi, who at the time was part of a Coinbase team that listed assets on the exchange, passed on confidential information about when some cryptocurrency assets would be listed to his brother, Nikhil Wahi, and his brother’s friend Sammer Ramani. Nikhil Wahi and Mr. Ramani used that information to buy the assets before Coinbase announced they’d be listed, the authorities said. After the announcement, the men sold the assets for a profit. The alleged scheme came to light after Coinbase began an internal investigation in April in response to a post on Twitter about unusual trading.
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