SEC Lists 9 Crypto Assets on Coinbase as Unregistered Securities

This article comes fromDecrypt, original author: Jason Nelson

Odaily Translator | Nian Yin Si Tang

This article comes from

, original author: Jason Nelson

Odaily Translator | Nian Yin Si TangAt least nine digital assets listed on cryptocurrency exchange Coinbase are unregistered securities, the U.S. Securities and Exchange Commission (SEC) alleges in a new court filing.The nine assets are AMP (AMP), Rally (RLY), DerivaDEX (DDX), XYO (XYO), Rari Governance Token (RGT), LCX (LCX), Powerledger (POWR), DFX Finance (DFX) and Kromatika (KROM).

“Our message to these allegations is clear: Fraud is fraud, whether it occurs on the blockchain or on Wall Street,” the SEC said in its statement.

complaint

wrote in.In response, Coinbase responded that the laws of the United States have not kept up with the pace of the digital world and need to be revised. Cryptoassets that are securities require an updated rulebook to help guide safe and efficient operations. Cryptoassets that are not securities need to be identified as exempt from these rules. Anything below that would entrench existing technology at the expense of innovation and ultimately harm consumers.

"A digital token or encrypted asset is an encrypted asset security if it meets the definition of a security, and the Securities Act defines a security as including an 'investment contract', that is, if it constitutes an investment of funds in an ordinary business, and a reasonable expectation of profit from the efforts of others," the SEC wrote in a complaint against a former Coinbase employee accused of insider trading.

According to the official announcement of the U.S. Department of Justice

, the U.S. Attorney for the Southern District of New York and the SEC arrested former Coinbase asset listing team product manager Ishan Wahi on Thursday following a months-long investigation. Ishan Wahi allegedly leaked insider information that helped his brother and friends buy tokens before they were listed on a cryptocurrency exchange.

According to the announcement, according to confidential information provided by Ishan Wahi, his brother and friends conducted a large number of illegal purchase transactions before at least 14 separate Coinbase public listing announcements involving at least 25 different encrypted assets, and generated a total of at least approximately $1.5 million realized and unrealized gains. Ishan Wahi was charged with two counts of conspiracy to commit wire fraud, each carrying a maximum sentence of 20 years in prison.

“Prior to these announcements, which typically lead to asset price increases, Nikhil Wahi and Ramani allegedly purchased at least 25 crypto assets, at least nine of which were securities, and then sold these assets at a profit, often shortly after the announcement.” The SEC said in a release.

The SEC said the nine tokens contained "security-defining characteristics," including ongoing representations by the issuer and its management team of the value of the investment in the tokens, efforts to help manage the value of the tokens, and a secondary market for token trading availability.

“Consequently, reasonable investors in these nine cryptoasset securities will continue to monitor the efforts of issuers and their promoters, including their future initiatives, to increase the value of their investments at all times related to the conduct alleged in this complaint ,” the SEC explained.

“Our petition calls on the U.S. SEC to develop a workable regulatory framework for digital asset securities guided by formal procedures and a public notice and comment process, rather than through arbitrary enforcement or guidance crafted in private,” the company said.wroteMeanwhile, Kromatika Finance, the Ethereum-based DEX aggregator behind the KROM token, today responded to the SEC’s allegations of insider trading at Coinbase and the SEC’s action to list the KROM token as an unregistered security on the exchange.

“We noticed that our token KROM was mentioned in an insider trading complaint.” Kromatika tweeted

wrote

, “This complaint is against a Coinbase employee. Neither Kromatika Finance nor our employees are involved in this case.”

According to Kromatika, Coinbase did not consult its team about going live. "We are also confident that Coinbase will help authorities clarify the circumstances arising from errors made by independent individuals."

So far, the US SEC has had a complicated, if mostly adversarial, relationship with the crypto industry.

While the US SEC has stated in the past through public statements from former officials that it does not consider Bitcoin and Ethereum to be securities, current Chairman Gary Gensler has been less forthright. Last month, he told CNBC that he would only say definitively that bitcoin is not a security, while dodging questions about ethereum.statementIt is unclear whether the US SEC plans to sue Coinbase over the nine or more unregistered securities listed, although the SEC issued a lawsuit warning against the encryption exchange last year, which caused Coinbase to abandon its encrypted interest-bearing product Lend.

in a subsequent

statement