READ: The Full Indictment of Coinbase Employee Ishan Wahi

The Justice Department announced Thursday it had indicted a former Coinbase employee and two of his associates for using insider knowledge to purchase tokens before they hit the exchange and subsequently dumping them on the public.

The DOJ said the three individuals included 33-year-old Sameer Ramani, as well as two brothers, 32-year-old Ishan Wahi and 26-year-old Nikil Wahi. Ishan, who worked as a product manager for Coinbase, served on the company’s asset listing team. Officials said he used the position to feed information about “25 crypto assets” that Coinbase was set to list to Ramani and to his brother “at least 14″ separate occasions,” netting approximately $1.5 million in profit.

They said the activity included a $67,000 purchase of TRIBE in August 2021, as well as a $610,000 purchase of XYO between August and September. The three spent another $134,000 on ALCX, GALA, ENS, POWR in November, and $370,000 on several unspecified tokens included on an April 11 list of cryptocurrencies that Coinbase said it planned to add at a later date.

The Justice Department noted it was the final move that tipped off a social-media influencer — Cobie — who brought it up on Twitter, prompting Coinbase to investigate.

Found an ETH address that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published, rofl pic.twitter.com/5QlVTjl0Jp

— Cobie (@cobie) April 12, 2022

“A Twitter account that is well known in the crypto community, with hundreds of thousands of followers, tweeted that it had identified an Ethereum blockchain wallet ‘that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published,'” the DOJ said. The tweet prompted Coinbase’s April 28 announcement that it was investigating “someone inside Coinbase” for potential insider trading.

Company executives on May 11 requested a meeting with Ishan, who replied that he was in India. However, feds that said in reality, the request prompted him to book a one-way ticket heading for New Delhi five days later. They nabbed Ishan at the airport, but said Ramani was still on the lam.

“Today’s charges are a further reminder that Web3 is not a law-free zone,” U.S. Attorney Damian Williams said in a statement. “Just last month, I announced the first-ever insider trading case involving NFTs, and today I announce the first ever insider trading case involving cryptocurrency markets. Our message with these charges is clear: fraud is fraud is fraud, whether it occurs on the blockchain or on Wall Street. And the Southern District of New York will continue to be relentless in bringing fraudsters to justice, wherever we may find them.”

Coinbase CEO Brian Armstrong also weighed in on Thursday afternoon on Twitter, writing, “At Coinbase, we actively monitor for illegal activity and investigate any alleged misconduct. In April, we received information about possible frontrunning of assets shortly before being listed on Coinbase. We immediately launched an investigation into this. As a result of our investigation, we identified three suspects and provided this information to law enforcement. One person was a Coinbase employee who we terminated. Today, the DOJ has criminally charged this former employee and the two other individuals for this abusive conduct.

“This is a great reminder for everyone in crypto, and at Coinbase, that frontrunning is illegal and erodes trust,” he added.

The DOJ charged Ramani and Nikhil Wahi each with one count of wire fraud conspiracy and one count of wire fraud. Ishan Wahi is facing two counts on each charge. Each count carries a maximum sentence of 20 years in prison.

The only profitable trades I ever made were from tracking wallets via etherscan that seemed to have inside knowledge of exchange listings.

— Coinfessions (@coinfessions) July 20, 2022

The charges notably came a day after “Coinfessions” — a Twitter account that publishes anonymous crypto-related confessions — published a relevant message from one of its fans. “The only profitable trades I ever made were from tracking wallets … that seemed to have inside knowledge of exchange listings,” the person wrote.

You can read the DOJ’s full indictment embedded above.