The Department of Justice (DOJ) and Securities and Exchange Commission (SEC) charged a former product manager at Coinbase with insider trading for allegedly passing on tips to his brother and friend regarding when certain cryptocurrency assets would be made available on the platform.

The case marks the first time insider trading charges have been brought involving the cryptocurrency market, the DOJ said in a press release.

The agency filed a criminal complaint Tuesday in U.S. District Court for the Southern District of New York against former Coinbase product manager Ishan Wahi, his brother Nikhil Wahi, and friend Sameer Ramani. Ishan Wahi and Nikhil Wahi were arrested in Seattle, while Ramani remains at large, the DOJ said.

The SEC followed Thursday with a complaint also alleging insider trading by the three men filed in U.S. District Court for the Western District of Washington.

The DOJ complaint alleged Ishan Wahi was “involved in the highly confidential process of listing crypto assets on Coinbase’s exchanges,” and that the value of cryptocurrency assets typically rose after being listed on Coinbase. The complaint said Wahi passed on tips to his brother and friend about at least 25 cryptocurrency assets to buy and when. The men would buy cryptocurrency assets based on the tips, wait for them to be listed on Coinbase, then immediately resell them.

The scheme generated between $1.1 million and $1.5 million from June 2021 to April 2022, according to the regulators. Most of the communication between the three men allegedly occurred on a “foreign phone” that did not have a U.S. number, as well as messaging apps connected to the phone.

A third party sent a Twitter message in April regarding “suspicious and timely trading” of a cryptocurrency asset by Ramani before it was listed by Coinbase, according to the SEC’s complaint. A month later, Coinbase’s director of security operations scheduled an interview with Wahi “in connection with an ‘ongoing company investigation into Coinbase’s asset listing process.’” Wahi confirmed he would attend but instead attempted to board a plane to India. He was prevented from leaving the country by law enforcement.

The DOJ charged Wahi with two counts of wire fraud and two counts of wire fraud conspiracy. Nikhil Wahi and Ramani were charged with one count of wire fraud and wire fraud conspiracy each. The SEC alleged the three men violated the antifraud provisions of the securities laws because at least nine of the cryptocurrency assets they illegally traded were securities.

Coinbase Chief Executive and Co-Founder Brian Armstrong, in a blog post updated Thursday, said, “Coinbase takes allegations of improper use of company information very seriously, as demonstrated by our rapid investigation of this matter. Again, we have zero tolerance for this kind of misconduct and will not hesitate to take action against any employee when we find wrongdoing.

“We work hard to ensure all market participants have access to the same information, not only to protect our company but to protect our customers. We are committed to doing our part to ensure all traders are operating on an even playing field, which is critical to furthering Coinbase’s mission of promoting economic freedom.”