Coinbase CLO 100% Disagrees With SEC’s Fraud Charges
- Coinbase CLO does not agree with the allegations put forth by the SEC stating that it does not list securities
- CFTC Commissioner Caroline Pham called the SEC’s moves “a striking example of ‘regulation by enforcement'” by the financial authority
Following the Department of Justice (DOJ) investigation into Coinbase’s former product manager Ishan Wahi’s misuse of the exchange’s confidential information about token listings, the United States Securities and Exchange Commission (SEC) separately lodged a complaint of securities fraud charges against the individual.
Broadly speaking, the SEC is in charge of regulating securities, while the Commodity Futures Trading Commission (CFTC) regulates currency trading.
SEC alleges that the insider trading scheme included nine digital asset securities. However, the DOJ reviewed the facts and chose not to file securities fraud charges against Wahi and his alleged crime partners. Moreover, CFTC Commissioner Caroline Pham called the SEC’s moves “a striking example of ‘regulation by enforcement'” by the financial authority.
In response to the SEC’s actions, Paul Grewal, Coinbase Chief Legal Officer, published a blog post titled “Coinbase does not list securities. End of story.” He stated that the exchange clearly denies that these assets were securities.
Grewal writes on Coinbase’s behalf that today’s charges are a reminder that Web3 is not a law-free zone. He said that seven of the nine assets included in SEC’s charges are listed on the exchange. However, he added:
“None of these assets are securities. Coinbase has a rigorous process to analyze and review each digital asset before making it available on our exchange — a process that the SEC itself has reviewed.”
The above mentioned procedure includes a thorough examination of whether the listed asset might be considered a security, as well as components of the asset’s regulatory compliance and information security.
Coinbase said that it corporated with the SEC’s investigation into wrongdoings charged by the DOJ on Wahi. It added that instead of having a dialogue with it, the regulatory body jumped directly to litigation.
According to Grewal, the recent charges by the SEC put a spotlight on the United States’ insufficient and unclear regulatory framework for digital asset securities. He added that instead of modifying rules to make the system more inclusive and transparent, the SEC “is relying on these types of one-off enforcement actions to try to bring all digital assets into its jurisdiction, even those assets that are not securities.”
Ramani is still at large, but Ishan Wahi and his brother Nikhil Wahi were arrested in Seattle on Thursday morning.