For the first time, federal prosecutors in the US have file charges of wire fraud relating to an insider trading scheme for cryptocurrency, the New York Times reports. Three people are being charged with wire fraud, including a former employee of Coinbase digital exchange. According to Southern District of New York attorney Damian Williams, it is the first charges are being made for cryptocurrency insider trading, but expects this to happen a lot more than is initially apparent.
Read: Massmart reports positive period of ‘only’ R1 billion loss
Prosecutors have alleged that the Coinbase employee, Ishan Wahi, shared confidential information about future asset listings with his brother Nikhil Wahi and his brother’s friend Sammer Ramani. According to the filing made with the Securities and Exchange Commission, the data was shared between June 2021 and April 2022, and helped Nikhil and his friend buy assets before the listing boosted their value. After the initial spike they would then sell the assets for a hefty profit. The purchases of 25 or more assets netted a profit of more than $1.1 million, according to the SEC.
An internal investigation was launched by Coinbase in April 2022, with the company planning to interview Wahi. He booked a flight to India right before Coinbase was set to interview him, but he and his brother were arrested in Seattle. The third accomplice is still at large and believed to be in India.
While several companies have been given large fines due to securities violations, but this is the largest case against an individual or group of people. It is meant to serve as a warning, with governments around the world want to make clear that fraud is illegal whether it’s “on the blockchain or on Wall Street,” as Williams explained.
Coinbase said it had turned over information to the Justice Department and had fired Wahi as part of a “zero tolerance” policy for this behaviour.
