Blockchain Association backs former Coinbase executive involved in insider trading
Crypto lobby group Blockchain Association has filed an amicus brief in the US Securities and Exchange Commission’s (SEC) lawsuit against a former Coinbase executive and two other individuals.
Last year, the SEC sued former Coinbase employee Ishan Wahi, his younger brother Nikhil Wahi and a certain Sameer Ramani for allegedly engaging in insider trading involving “crypto-asset securities.”
The Blockchain Association says in the amicus brief that the SEC has labeled some crypto-assets as securities without any court ruling on the matter.
“In this action, the Securities and Exchange Commission (‘SEC) asserts that several cryptographic tokens are ‘securities’ without any prior court ruling, and in a manner that disallows users or creators of these tokens. argue against that position. Such an action could have a serious negative effect on these tokens, which is a denial of the creators’ rights to due process.”
According to Blockchain Association CEO Kristin Smith, the SEC’s actions have a negative impact on stakeholders.
“With this action, however, the SEC’s actions target third parties who have no meaningful opportunity to defend themselves. The SEC has done more to confuse rather than clarify the application of US securities laws, spreading fear and cultivating mistrust among the very market participants the agency has in task to protect.
Earlier this month, lawyers for the defendants filed a motion asking the court to dismiss the SEC’s amended complaint against the Wahi brothers and Ramani. The lawyers argued in the filing that the SEC is using “brute force” to seize broad regulatory jurisdiction over the crypto industry.
“The basis of the Amended Complaint is that the digital assets Ishan Wahi, his brother and the other defendant traded are “securities” within the meaning of the Exchange Act.
Specifically, the SEC claims that each of these digital assets constitutes an “investment contract” (and thus a security). The SEC is wrong.
The term “investment contract” requires – as the law says – a contract. But here there are no contracts, neither written nor implied.
The developers who created the tokens in question have no obligations whatsoever to buyers who later bought those tokens on the secondary market.
And with zero contractual relationship, it cannot be an “investment contract”. It’s that simple.”
Earlier this month, Ishan Wahi pleaded guilty to two counts of conspiracy to commit wire fraud in connection with an insider trading scheme in a separate lawsuit filed by the US Department of Justice (DOJ).
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