Today, the United States Securities and Exchange Commission (SEC) stated in a court filing that 9 tokens listed on are securities, leading to strong criticism from the industry on the agency's regulatory approach.

Insider Trading at Coinbase Exchange

Former product manager at , Ishan Wahi, was arrested Thursday on charges of wire fraud in connection with an insider trading scheme.

Wahi, of the asset listing team, has repeatedly given his brother Nikhil Wahi and friend Sameer Ramani — both of whom face similar charges — on new tokens that are expected to be listed. listed on Coinbase, the US DOJ alleges.

Both have made at least $1.5 million from illegal transactions from 25 different crypto assets and at least 14 separate public listings on Coinbase, which according to US Attorney Damian Williams was the “first case of insider trading involving the market” .”

“Our message to these cases is clear: fraud is fraud, even if it happens on the internet. or Wall Street," Williams emphasized.

While the transaction took place at least between June 2021 and April 2022, the DOJ refers to one incident in particular as on April 11, 2022, when Coinbase announced that it would be able to ability to list dozens of coins.

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The agency points to a tweet from crypto investor and commentator Cobie referring to “an address” purchased hundreds of thousands of dollars in tokens featured exclusively in the Coinbase Asset Listing post about 24 hours before it was published.”

That tweet clearly describes Ramani's activities, the DOJ said, noting that he and Wahi have "run multiple wallets". anonymously buy in bulk of at least 6 of the token assets” included in that list.

Wahi and Ramani attempted to conceal the cryptocurrency purchases they made before the new listing was published by using accounts belonging to centralized exchanges in other people's names and transferring funds through through many wallets incognito.

The United States Securities and Exchange Commission () also filed a parallel complaint with the DOJ.

Listed 9 tokens are securities

In a complaint filed today regarding an insider trading case involving a former Coinbase employee and two accomplices, announced that “at least” 9 cryptocurrencies listed on Coinbase are securities. The crypto industry was quick to criticize the move as a clear example of “regulation by enforcement.”

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The tokens classified as securities in the complaint are AMP by Flexa, by Rally, by DerivaDEX, XYO of the XY Labs, RGT by Rari Capital, LCX by Liechtenstein Cryptoassets , POWR by Power, DFX by DFX Finance and KROM by Kromatika Finance. All these tokens are issued on the blockchain Ethereum.

Gurbir Grewal, Director of the SEC's Division of Enforcement said:

“We are not concerned with the trademark, but rather with the economic realities of an offering. In this case, those facts affirm that some of the crypto assets in question are securities, and as alleged, the defendants engaged in typical insider trading prior to listing on Coinbase. "

The SEC complaint marks one of the few instances where specific cryptocurrencies have been deemed securities by the regulator. Previously, the SEC has refused to clarify the regulatory status of many cryptocurrencies while repeatedly arguing that tokens need to be regulated by securities regulation.

Coinbase refutes the idea, asserting that “None of the assets listed on our platform are securities.” In a blog post, the exchange petitioned the SEC to create a regulatory framework for cryptocurrencies “guided by formal procedures, notification processes, and public comment, rather than announcements.” through arbitrary implementation or instruction that is quietly developed”.

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Commodity Futures Trading Commission Commissioner Caroline Pham () also criticized the SEC in a letter posted on Twitter.

“Vụ án SEC kiện Wahi là một ví dụ nổi bật về ‘quy định bằng thực thi’”.

Blockchain Association Chief Policy Officer Jake Chervinsky echoed this view and declared the case a “mess” that will likely require “nine small tests” to determine if each token is cited in the filing. Is it really a stock or not?

Just two days ago, Representative Tom Emmer (R-MN) criticized the SEC in a congressional hearing for “using enforcement to expand its jurisdiction,” mocking the agency.” power-hungry” and “hellbent” to achieve his political goals at the expense of the crypto industry.

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