Coinbase CEO Brian Armstrong says the exchange informed authorities about a suspected insider tipping scheme involving a former employee.

Indictment records show Coinbase former product manager Ishan Wahi tipped his brother, Nikhil Wahi, and his friend, Sameer Ramani, of the firm’s upcoming public listing announcements, which include information about new crypto assets the platform will be supporting.

Coinbase keeps this information confidential because the market value of tokens tends to increase once the exchange announces its listing. Armstrong says the company immediately launched an investigation after receiving information about the scheme.

“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 3 suspects and provided this information to law enforcement. One person was a Coinbase employee who we terminated. Today, the [Department of Justice] has criminally charged this former employee and the two other individuals for this abusive conduct.”

The U.S. Securities and Exchange Commission (SEC), which filed the complaint, says that from June 2021 to April 2022, Wahi repeatedly informed his brother and friend about Coinbase’s upcoming token listings. Nikhil Wahi and Ramani allegedly bought at least 25 crypto assets and sold them for profit after the announcements.

The perpetrators then set up accounts at centralized exchanges using other people’s names and moved funds using different anonymous Ethereum (ETH) wallets with no prior transaction history to conceal their involvement in the scheme that generated at least  $1.5 million in profits.

The Department of Justice says the Wahi brothers and Ramani are facing charges for wire fraud conspiracy and wire fraud in connection with a scheme to commit crypto insider trading.

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The post Coinbase Tipped Law Enforcement on Executive Suspected of Crypto Insider Trading, Says CEO Brian Armstrong appeared first on The Daily Hodl.