- The U.S. Securities and Exchange Commission (SEC) has claimed in an insider trading lawsuit that some cryptocurrencies are securities.
Today, the US Department of Justice filed charges against three suspects for alleged involvement in a domestic trading scheme, one of which was a former Coinbase employee. The lawsuit is expected to have major implications for the crypto industry.
Following the DoJ’s announcement, the Securities and Exchange Commission (SEC) filed charges against Ishan Wahi, his brother Nikhil Wahi, and friend Sameer Ramani in federal district court in Seattle, Washington. The first of these people worked as a product manager in the stock market.
The suspect allegedly shared confidential information with these two individuals to take advantage of future Coinbase listing announcements and invested accordingly.
Following these, the US SEC made it clear in this historic insider trading lawsuit that the cryptocurrencies listed on Coinbase are actually “crypto-asset securities”.
US regulators will use the case to prove that at least 9 of the 25 tokens traded by the defendant are unregistered securities. According to the complaint, these assets operate as “investment contracts” that are sold to investors with “reasonable expectation of profits from the efforts of others.”
Gurbir Grewal, Director of the Securities and Exchange Commission Enforcement Office, said about the Commission’s complaint and its ultimate goal, which he stated was focused on “economic facts” rather than labels:
“In this case, these facts confirm that some of the crypto assets in question are securities and that the defendants allegedly engaged in typical insider trading before they were listed on Coinbase. Rest assured, we will continue to provide a level playing field for investors, regardless of the label on the respective securities.”
Altcoins that the SEC claims to be securities
To pay attention to the list, none of the cryptocurrencies mentioned are among the top 50 cryptocurrencies of Coin Market Cap. The following cryptocurrencies are listed by the SEC
- Amp (AMP) #88
- Rally (RLY) #161
- Power Ledger (POWR) #172
- XYO Network (XYO) #272
- Rari Governance (RGT) #332
- Lcx (LCX) #386
- DerivaDAO (DDX) #600
- Chromatica (CHROM) #1020
- DFX Finance (DFX) #3416
Coinbase has made it clear that it disagrees with the SEC, specifically stating that the cryptocurrencies mentioned are not securities. The exchange described the accusations as an “unfortunate distraction” carried out to evade appropriate “law enforcement action”.
Caroline D. Pham, executive director of the U.S. Commodity Futures Trading Commission (CFTC), also commented on the matter, pointing to broader sanctions, claiming that the SEC’s claims could have “broad applications” beyond this single case.
Alongside these, Coinbase has sent a petition asking the SEC to issue clear rules, clear guidelines regarding crypto trading.
1/ At Coinbase, we actively monitor for illegal activity and investigate any alleged misconduct. In April, we received information about possible frontrunning of assets shortly before being listed on Coinbase. We immediately launched an investigation into this.
— Brian Armstrong – barmstrong.eth (@brian_armstrong) July 21, 2022
Also earlier today, SEC Chairman Gary Gensler once again stated that most cryptocurrencies are unregistered securities so they can be a “working market.”
The SEC seems to be pressing this case to expand its jurisdiction in the digital asset industry, taking advantage of this case. SEC Chairman Gary Gensler only acknowledges that he is “willing” to accept Bitcoin as a commodity and therefore an asset beyond the reach of the regulator.
You can follow the current price action here.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.