Photo/Illutration The Bitcoin logo appears on the display screen of a cryptocurrency ATM in Salem, N.H., on Feb. 9, 2021. (AP Photo)

NEW YORK--A former Coinbase product manager and his brother, along with a Houston man, were charged Thursday in what federal authorities described as the U.S. government’s first cryptocurrency insider trading case.

The brothers--Ishan Wahi and Nikhil Wahi--were arrested while the Houston man, Sameer Ramani, remained at large, federal authorities said as they announced the unsealing of an indictment in a federal court in Manhattan.

Authorities said Ishan Wahi, 32, was a product manager at Coinbase Global Inc., one of the world’s largest cryptocurrency exchanges, based in Seattle, when he provided tips to Nikhil Wahi, 26, and their friend, Ramani, 33. All three were charged with wire fraud conspiracy and wire fraud.

The indictment said Ishan Wahi was stopped by law enforcement prior to boarding a May 16 flight to India and was prevented from leaving the country. In the hours before the flight, he had telephoned and sent texts to his brother and Ramani to alert them about an investigation Coinbase was carrying out, according to a release.

Ishan Wahi bought a one-way airline ticket to India in an “unsuccessful attempt to flee from the United States” after agreeing to be interviewed for an internal probe by Coinbase, the indictment said.

U.S. Attorney Damian Williams said the prosecution represents the government’s first insider trading case involving cryptocurrency markets. He said it was a reminder that the cryptocurrency markets are not a law-free zone.

Michael Driscoll, head of the FBI’s New York office, said the defendants collected about $1.5 million in illegal profits by trading in at least 25 different crypto assets.

Attorneys representing Ishan Wahi said in an email to The Associated Press that their client is innocent and “intends to defend himself vigorously against these charges and in the SEC action.”

Messages seeking comment were sent to other defense lawyers.

The Securities and Exchange Commission brought civil insider trading charges against the men in Seattle federal court.

The SEC said the charges were brought against the trio after they carried out a scheme to trade ahead of multiple announcements regarding certain crypto assets that were going to be made available for trading on the Coinbase platform.

“As today’s case demonstrates, whether in equities, options, crypto assets, or other securities, we will vindicate our mission by identifying and combatting insider trading in securities wherever we see it,” said Carolyn M. Welshhans, Acting Chief of the Enforcement Division’s Crypto Assets and Cyber Unit.

The New York indictment said Ishan Wahi began working as a product manager on the asset listing team in October 2020. It said he provided tips about confidential information to his brother and friend from June 2021 until this past April.

Brian Armstrong, the chief executive for Coinbase, said on Twitter and in a blog post Thursday that the company began an internal probe in April “about possible frontrunning of assets shortly before being listed on Coinbase.”

The indictment said the frontrunning was identified publicly by a Twitter posting in April on an account “that is well known in the crypto community, with hundreds of thousands of followers.”

Armstrong said that the company gathered sufficient evidence and then fired Ishan Wahi and forwarded its findings about the three men to the Justice Department.

He added: “We will investigate and refer bad actors to law enforcement, and they will face real legal consequences including serving prison time.”

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