Blockchain Association: SEC Enforces Coinbase Case “Absentee”
- Coinbase has an active user base of over 98 million, most of whom are American.
- Coinbase offers to trade 240+ cryptoassets.
- Reports from the SEC claim that Ishan Wahi generated over USD 1 million from insider trading.
The US Securities and Exchange Commission is laying out a detailed roadmap to list nine tokens as securities at the center of an insider trading case, giving token creators no time to defend themselves.
Last month brought an unprecedented case to the SEC involving digital assets and insider trading. The SEC found Nikhil Wahi, brother of Coinbase product manager Ishan Wahi, guilty of participating in a crypto insider trading scheme and sentenced him to 10 months in prison. This is the first time the SEC has filed a case of insider trading and market manipulation related to digital currency. Although it began as an inevitable breach of trust, this incident serves as a reminder that no one can escape justice when engaging in fraud of any kind.
According to an SEC filing dated February 7, 2023, Wahi pleaded guilty to insider trading charges, changing his plea from not guilty. However, Wahi still disputes the securities fraud charges.
The filing also notes that Ishan Wahi hinted to his associates regarding crypto assets to be listed on Coinbase exchanges. AMP, XYO, LCX, POWR, RLY, RGT, DDX, DFX and KROM are the primary tokens questioned by the SEC.
According to CoinMarketCap, all of the above tokens are ranked above 150 in terms of trading volume and market dominance. But during the court proceedings, lawyer Ishan Wahi argued that the suspected tokens are not, so Wahi cannot be charged with securities fraud.
A Washington-based crypto lobby organization, the Blockchain Association, is trying to advance the argument that the SEC is engaging in “absentee enforcement” because the token developers are not involved in the case, nor can they by law intervene or otherwise be heard.
The document says that “Such conduct is unbecoming of a public agency and is inconsistent with due process concerns,” adding that “the SEC’s motive is then simply to return to a precedent that can be used in other cases, which, It does indeed, it already has in other cases where the DOJ has filed suit, and the SEC has filled in with similar allegations of securities law violations against absent third parties.”
The document also notes that “Instead of pursuing the appropriate regulatory under [Administrative Procedure Act] to address these problems, the SEC has instead issued a long history of inconsistent, incomplete, and confusing public statements, and has followed a pattern of “regulation by enforcement,” “Now, the SEC is expanding its doctrine of “regulation by enforcement” to “regulation of an unchallenged claim.”
Reports from the SEC mentioned that Ishan Wahi and his brother had earned more than 1 million US dollars by executing and engaging in insider trading.
Wahi’s defense attorney asked the court to dismiss the case filed by the SEC against Coinbase and the former head of one of the largest crypto exchanges.
Most recently, the SEC took action against prominent crypto exchanges. The Kraken sent shivers through the border crypto room. The financial regulator’s perception of crypto staking signals others to take care of their business related to the same. The leading American crypto exchange Coinbase has clarified whether the SEC would come after chasing its crypto staking operations.
