The Chamber of Digital Commerce, a U.S.-based blockchain advocacy group, urged a federal court to dismiss a case brought by the Securities and Exchange Commission (SEC) against an ex-Coinbase employee accused of insider trading, arguing that the case incorrectly classified several crypto assets as securities, in an amicus brief filed on Wednesday.
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Fast facts
- The Chamber of Digital Commerce argued that the case is being used as a “back door” attempt to define certain crypto assets as securities in absence of clearer regulations from congress.
- The SEC brought the charges in July against former Coinbase product member Ishan Wahi and two others for allegedly profiting from at least 25 crypto assets based on insider knowledge, nine of which the agency claimed are securities. Wahi and his co-defendants filed a motion to dismiss the case on Feb. 6, arguing that their digital asset sales were outside the SEC’s enforcement jurisdiction.
- The Chamber of Digital Commerce said in the amicus brief filing that if the case were to move forward, crypto exchanges offering the nine tokens could face state and federal regulatory actions and private litigation. The advocacy group said that investors would be harmed by the value of the assets that would be affected, and blockchain firms may move to foreign jurisdictions.
- An amicus brief is a document filed in court by a person or organization that is not a party to the case but petitions for permission to submit a statement intended to influence the court’s decision. The Blockchain Association, another U.S.-based crypto trade group, also filed an amicus brief in the case earlier this month.
- The SEC’s recent crackdown on the crypto industry has been criticized as ‘regulation by enforcement’ as the agency’s cases against digital assets firms have been mounting. The SEC has maintained that pre-existing securities laws could also apply to certain cryptocurrencies and digital assets.
- Wahi has also faced criminal charges for wire fraud and insider trading. The ex-Coinbase employee pleaded guilty to two counts of conspiracy to commit wire fraud earlier in February.
See related article: SEC may make it harder for hedge funds to work with crypto firms: Bloomberg
