US Files First Criminal Prosecution Over Crypto Insider Trading Case | TechBuzz

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The United States is suing for alleged insider trading in crypto, a first for the country which intends to set an example.

The American authorities continue their fight against the insider trading of digital assets. The New York Times reports that a criminal case has been filed by the City of New York City against three individuals for wire fraud in connection with insider trading in cryptocurrencies. In particular, a former employee of the Coinbase exchange, Ishan Wahi, is accused. This is the first time that US authorities have initiated proceedings at this level regarding insider trading in digital currencies, according to Southern District of New York attorney Damian Williams.

US criminally sues for alleged crypto insider trading

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As with the civil case initiated by the Securities and Exchange Commission (SEC), the plaintiffs accuse Ishan Wahi of sharing confidential information regarding future asset announcements with his brother Nikhil Wahi and his brother’s friend Sammer Ramani. Data shared between “at least” June 2021 and April 2022 would have helped Nikhil and his friend buy assets before these announcements boosted their value. The two accomplices would then have sold their assets to make significant profits. Purchases of 25 or more assets would have earned more than $1.1 million, according to the SEC.

Coinbase launched an internal investigation last April in response to a Twitter post alleging unusual trading activity. Ishan Wahi had booked a flight to India before Coinbase could interview him, but he and his brother were arrested in Seattle just recently. Sammer Ramani is still at large, he is supposedly in India, according to the SEC.

A first for the country which intends to set an example

The lawyers continue to claim the innocence of their client and explain that he was going to defend his case “vigorously”. Sammer Ramani and Ishan Wahi’s brother’s attorney did not comment on the charges. Coinbase said it passed its information to the Department of Justice and fired Ishan Wahi as part of its “zero tolerance” policy for such behavior.

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It’s not the biggest deal of its kind. Lending firm BlockFi recently paid out $100 million as a settlement to a possible breach of those same rules. Telegram paid out $1.2 billion to investors for similar breaches, in addition to paying out $18.5 million. That being said, this criminal case is more of a warning. The government wants to make it clear that the fraud is illegal, whether it takes place “on the blockchain or on Wall Street”, as Damian Williams explained to the New York Times. This is more to discourage potential future fraudsters than to punish these three defendants.

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