SEC investigates 9 tokens as securities on Coinbase

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2022-07-23 01:19:41

After the former Coinbase Product Manager and two accomplices were arrested for insider trading on the evening of July 21, the Securities and Exchange Commission (SEC) announced that it has confirmed 9 cryptocurrencies on Coinbase as securities. securities. The case is continuing to stir up the community.

SEC and CFTC simultaneously joined Coinbase investigation

In the wake of the U.S. Securities and Exchange Commission (SEC) filing against a former Coinbase product manager, Caroline Pham, one of five members of the U.S. Commodity Futures Trading Commission (CFTC). expressed concern about the possible impact.

Yesterday (July 21), after nine cryptocurrencies listed on Coinbase were allegedly securities, Pham said the SEC complaint was sent to former product manager Ishan Wahi and his brother Nikhil. Wahi and his partner Sameer Ramani. He commented that it “could lead to the unexpected”.

SEC and CFTC simultaneously joined Coinbase investigation

The content of the complaint alleges that the Wahi brothers and the man Ramani engaged in insider trading. By using confidential data that Ishan Wahi (former Coinbase director) obtained from the relevant exchange and information on which tokens to list on the exchange, these three people colluded to buy and sell. pre-order.

The SEC named 9 tokens of the case including: Powerledger (POWR), Kromatika (KROM), DFX Finance (DFX), Amp (AMP), Rally (RLY), Rari Managed Token (RGT), DerivaDAO (DDX), LCX and XYO. They are 9 out of 25 different cryptocurrencies that the trio allegedly used to profit from $1.1 million – in the form of securities.

In the application, the SEC stated its position:

“Our message with these tokens is clear: fraud is fraud is fraud, whether it happens on blockchain or on Wall Street, we reach the same conclusion.”

In fact, this is one of the few times that the SEC specifically mentions which tokens are securities over the years. Because former SEC Chairman Jay Clayton previously asserted that Bitcoin is not a security. And another former head of the SEC, Mr. William Hinman also stated that Ethereum (ETH) does not act as a security.

Pham said the SEC’s moves set a precedent for “Law enforcement through adjudication”. This precedent means that instead of addressing the question of whether certain crypto assets are securities, the SEC will analyze it “through a transparent process involving the public in formulating appropriate policy.” consistent with expert input”.

In addition, Coinbase is also in the sights of the “sister to the SEC” agency, the Commodity Futures Trading Commission (CFTC).

The CFTC commissioners have publicly called for more cooperation with the SEC on the case. They even asserted that if the SEC does not intervene further and reject the 9 tokens “in the criminal case”, the CFTC will participate directly in the investigation of the trading regulations of these tokens.

In the view of attorney Jake Chervinsky, the SEC’s jurisdiction will hinge on deciding whether the other nine tokens are actually securities. In other words, in the event that it is possible to require 9 different small tests, each test will be conducted for each token, in order to conclude on their current status.

Feedback from Coinbase

Coinbase Responds to Pressure from Two US Financial Regulators
Coinbase Responds to Pressure from Two US Financial Regulators

On Coinbase’s side, the company’s Chief Security Officer Philip Martin gave an explanation on behalf of the company. Accordingly, he said that during the investigation of former Coinbase employees on insider trading, the exchange had a very cooperative attitude with the authorities to thoroughly solve the case. Coinbase has committed to doing its part to ensure that all market participants have access to the same information. The platform will not hesitate to take action when misconduct is discovered.

Along with that, the exchange also responded to the SEC’s allegation through its own blog post. Coinbase argues that US legislation has not kept pace with the digital world and needs to be revised. If crypto assets are securities, then the Government needs to make regulations to help guide safe and effective implementation methods.

On the contrary, if digital assets are not securities, the agencies must follow the regulations, maintaining the stance they have created. Any omission leads to undue negative effects on the technology industry, increasing costs and ultimately directly affecting users.

Coinbase also filed a petition with the SEC, arguing that the agency should develop “digital asset securities” rules. Coinbase says the introduction of such comprehensive rules would require a rigorous examination of how cryptocurrencies work, as distinguished from traditional financial securities. Along with that are the terms that will really protect investors when trading crypto securities.

CFTC and SEC are working to reduce regulatory pressure on cryptocurrencies in the US, calling for an “assertive” strategy to continue have advantages about cryptocurrencies ahead of countries that are betting heavily on the sector.

In June, Senators Cynthia Lummis and Kirsten Gillibrand introduced a bill to create clear and transparent regulations. However, it is “most likely to be delayed until next year”. On the other hand, a draft legislation focusing on Stablecoins in the US is also under consideration.

#SEC #investigates #tokens #securities #Coinbase

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