The first cryptocurrency insider trading scheme, in which two Indian brothers and their Indian American friend made illicit profits totaling over a million dollars, has been charged in the US.
Both Sameer Ramani, 33, and Ishan Wahi, 32, are citizens of India and reside in Seattle, while Nikhil Wahi, 26, resides in Houston.
Federal Bureau of Investigation Assistant Director-in-Charge Michael J. Driscoll and United States Attorney Damian Williams announced the arrests on Thursday, Indictment against the Wahi brothers and Ramani for wire fraud conspiracy and wire fraud was unsealed in connection with an insider trading scheme by using Coinbase information about crypto assets that were slated to be listed on Coinbase’s exchanges to commit insider trading in cryptocurrency assets.
Additionally, the SEC charged the three men with insider trading.
United States District Court for the Western District of Washington will hear the case against the Wahi brothers. They were arrested in Seattle on Thursday morning.
It appears Ramani is currently in India, according to the SEC complaint.
Ishan Wahi and Ramani attended the University of Texas at Austin together, and they remain close friends today.
Prosecutors said that the defendants made illegal trades in at least 25 different crypto assets and realized approximately USD 1.5 million in ill-gotten gains as a result of the cryptocurrency insider trading tipping scheme.
Web3 is not a lawless zone, as today’s charges illustrate. Today I announce the first ever insider trading case involving cryptocurrency markets. Last month, I announced the first ever insider trading case involving NFTs. Regardless of whether the fraud occurs on the blockchain or on Wall Street, the message is clear: fraud is fraud. In addition, Williams said, the Southern District of New York will remain relentless in prosecuting fraudsters, wherever they may be found.
The charges against Ishan Wahi carry a maximum sentence of 20 years for each count of wire fraud conspiracy and wire fraud.
Additionally, Nikhil Wahi and Ramani face charges of wire fraud conspiracy and wire fraud, each punishable by 20 years in prison.
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The Federal Reserve announced Thursday it will impose new rules on banks and financial institutions to prevent money laundering related to cryptocurrencies like Bitcoin. The move follows similar moves by regulators around the world.
In addition to requiring banks to report suspicious transactions, the Fed says it will require those institutions to verify the identities of customers involved in such activity.
The Fed says it plans to develop a list of “high risk” cryptocurrency businesses and individuals to help identify criminal activity.
The agency will also begin tracking how much cash flows into and out of crypto exchanges.
The announcement comes after the U.S. Treasury Department last week issued guidance to financial institutions regarding their obligations under anti-money laundering laws when dealing with virtual currencies.
The Financial Crimes Enforcement Network (FinCEN) has been working with other agencies to combat money laundering and terrorist financing through digital currency since 2014.
Bitcoin prices are down more than 50 percent this year, but the number of people using the leading cryptocurrency has grown significantly over the past few months.
Bitcoin was trading at $9,876.50 per coin on Wednesday afternoon, according to CoinMarketCap.com. That represents a drop of nearly 60 percent from the all-time high of $19,783.30 set on Jan. 4.
The price of bitcoin fell below $10,000 earlier this week for the first time since November 2017.
A federal judge sentenced an Indian man who pleaded guilty to running a multimillion dollar cryptocurrency scam to five years in prison.
U.S. District Judge Paul A. Engelmayer handed down the sentence Friday morning in Manhattan federal court.
Ishan Malsawmtluanga, 35, was arrested in March 2018 following an investigation by the FBI and IRS agents. He admitted that he ran a Ponzi scheme called “BitConnect.”
Malsawmtluanga told investors that BitConnect would generate returns of up to 10% daily, but instead used investor funds to pay himself and others.
He also lied about his background and claimed to work for the Central Bank of India.