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“Our message with these charges is clear: Fraud is fraud is fraud, whether it occurs on the blockchain or on Wall Street,” Mr. Williams, the U.S. attorney, said.
The S.E.C. said the cryptocurrency assets listed on Coinbase’s exchange are considered securities and, therefore, can be regulated like stocks or bonds — a stance that many in the digital currency world have objected to.
Last month, federal prosecutors brought an insider trading case involving the use of confidential information to purchase another kind of digital assets, nonfungible tokens, or NFTs. In that case, the authorities charged a former employee of an NFT marketplace with misappropriating confidential information about the timing of public listings for the digital tokens.
The two cases “are just the beginning of the D.O.J.’s crack down on insider trading in the crypto space,” said Ian McGinley, a former Justice Department prosecutor. “Both of these cases are for relatively small amounts, but D.O.J. brought them to send a message — they are watching.”
In a post on Coinbase’s website, the company’s chief executive, Brian Armstrong, said that Coinbase had turned over information about the three men to the Justice Department and had ended Mr. Wahi’s employment. “We have zero tolerance for this kind of misconduct and will not hesitate to take action against any employee when we find wrongdoing,” he wrote.
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