A person who used insider information to profit from trading cryptocurrencies has pled guilty in what is likely the first such case.

Nikhil Wahli, 26, is the brother of former Coinbase Global product manager Ishan Wahli. He pled guilty to charges of committing wire fraud conspiracy, telling a US judge that he had made trades based on confidential information.

Prosecutors said Ishan Wahi the shared the information about which digital assets Coinbase was planning to let users trade with his brother, along with a friend, Sameer Ramani.

Both Nikhil Wahi and Ramani then allegedly used the information to acquire the assets using Ethereum blockchain wallets. They traded at least 14 times between June 2021 and April 2022, prior to announcements from Coinbase that sent the asset values up.

The increases generated at least $1.5 million in gains.

According to US prosecutors, the case marks the first cryptocurrency insider trading case.

“I knew that it was wrong to receive Coinbase’s confidential information and make trades based on that confidential information,” Nikhil Wahi told US District Judge Loretta Preska

Ishan Wahi pled not guilty and is next scheduled to appear in court on next year, while Ramani is currently at large.

Coinbase said it had shared findings from an internal probe into the trading with prosecutors.

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As cryptocurrencies gain popularity, they have come under scrutiny over their uses by criminals. Designed to be anonymous, they are the asset of choice for paying ransoms in ransomware attacks, and untraceable tokens are popular in money laundering.

Research from the start of the year found that $8.6bn of cryptocurrencies were laundered in 2021, 30% more than in 2020. However, this was down from its peak in 2019, when $10.9bn were laundered.

Concerns about money laundering were widely seen as one of the reasons Binance, a major cryptocurrency trading platform, was banned from operating in the UK. In turn, the company later brought in more stringent background checks to fight money laundering.

On top of that, there have been numerous thefts of cryptocurrencies and other assets, such as NFTs. This year saw North Korean-linked hackers steal cryptocurrencies estimated to be worth over $600 million from the company behind popular video game Axie Infinity.

Another one, which targeted OpenSea, a major NFT trading platform, stole potentially millions of dollars of cryptoassets.

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