Feb 23, 2023
SEC Accused of Overreaching Authority in Crypto Insider Trading Case
The U.S. Securities and Exchange Commission (SEC) has once again been accused of overstepping its authority and unfairly labeling crypto assets as securities. This time, the accusations are in connection to an insider trading case against former Coinbase employees.
The Chamber of Digital Commerce, a U.S.-based advocacy group, has filed an amicus brief on February 22, 2021, to argue that the case should be dismissed. According to the Chamber, the SEC’s attempt to label these tokens as securities in the context of an enforcement action against third parties is “not a healthy policymaking process” and represents an expansion of the SEC’s “regulation by enforcement” campaign.
Perianne Boring, founder and CEO of the Chamber of Digital Commerce, noted that the SEC’s encroachment into the digital assets market was never authorized by Congress, and that in other Supreme Court cases it has been ruled that regulators must first be granted authority by Congress. She also highlighted that the SEC’s actions would “harm the very investors it is charged to protect”.
The Chamber also argued that in bringing claims of securities fraud, the SEC was essentially asking the court to uphold that secondary market trades in the nine digital assets mentioned in the case constitute securities transactions, which is “problematic”. The Chamber cited the LBRY v SEC case in its brief, in which the judge had ruled that secondary market transactions would not be designated as securities transactions.
The latest amicus brief follows a similar filing from advocacy group the Blockchain Association on Feb. 13, which also argued that the SEC had exceeded its authority in the case and claimed it was “the latest salvo in the SEC’s apparent ongoing strategy of regulation by enforcement in the digital assets space.”
The SEC in July sued former Coinbase Global product manager Ishan Wahi, brother Nikhil Wahi, and associate Sameer Ramani, alleging that the trio had used confidential information obtained by Ishan to make $1.5 million in gains from trading 25 different cryptocurrencies.
The SEC’s case against the former Coinbase employees has caused a stir in the crypto and web3 space, as it could have a major impact on the way NFTs and other crypto assets are regulated. It could also have a big impact on the way NFTs are marketed and promoted.
Many crypto and web3 businesses are now turning to NFT marketing agencies to help them promote and sell their NFTs. These agencies specialize in using Twitter and other social media platforms to reach potential buyers and increase the visibility of NFTs. They can also help businesses create and implement effective NFT marketing strategies that will maximize their ROI.
The SEC’s case against the former Coinbase employees is ongoing, and it is yet to be seen what the outcome will be. However, it is clear that the SEC’s actions could have a lasting impact on the way NFTs and other crypto assets are regulated, and on the way businesses use NFT marketing to promote and sell their NFTs.
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