Blockchain Association: SEC is Enforcing Coinbase Case "Absentee"

Coinbase has an active user base of over 98M, most of which are American.
Coinbase offers to trade 240+ crypto assets.
Reports of SEC claims that Ishan Wahi generated over 1 million USD from insider trading.

The U.S. Securities and Exchange Commission is laying out a detailed roadmap to list nine tokens as securities at the center of an insider trading case, giving token creators no time to defend themselves.

Last month brought an unprecedented case to the SEC involving digital assets and insider trading. The SEC found Nikhil Wahi, brother of Coinbase product manager Ishan Wahi, guilty of taking part in a crypto insider trading scheme and sentenced him to 10 months imprisonment. This is the first time the SEC has brought an insider trading and market manipulation case related to digital currency. Though it began as an inevitable violation of trust, this incident serves as a reminder that no one can escape justice when engaging in fraud of any form.

According to an SEC filing dated February 7, 2023, Wahi pleaded guilty to insider trading charges, changing his plea from not guilty. However, Wahi is still contesting the securities fraud charges.

The filing also notes that Ishan Wahi hinted about his associates regarding crypto assets that were going to be listed on Coinbase exchanges. AMP, XYO, LCX, POWR, RLY, RGT, DDX, DFX, and KROM are the primary tokens being questioned by the SEC.

According to CoinMarketCap, all the above tokens are ranked above 150 in terms of their trading volume and market dominance. However, during court proceedings, attorney Ishan Wahi argued that suspected tokens are not, so Wahi cannot be charged with securities fraud.

A Washington-based crypto lobbying institution, the Blockchain Association, seeks to advance the discussion that the SEC is engaging in “absentee enforcement” because the token developers are not involved in the case, nor, by statute, are they may interfere or otherwise be heard.

The docket says that “Such behavior is improper for a government agency, and is irreconcilable with due process concerns,” it further adds that “The SEC’s motive, then, is merely to backdoor a precedent that can be used in other cases, as, indeed, it is already doing in other cases where the DOJ has brought an action, and the SEC has piled on with similar allegations of securities laws violations against absent third parties.”

The docket also notes that “Rather than pursue proper rulemaking under the [Administrative Procedure Act] to address those issues, the SEC has instead issued a long history of inconsistent, incomplete, and confusing public statements, and has pursued a pattern of “regulation by enforcement,” “Now, the SEC extends its doctrine of ‘regulation by enforcement’ to ‘regulation by an unchallengeable allegation.”

Reports from the SEC mentioned that Ishan Wahi and his brother had made a profit of more than $1 million US dollars by executing and getting involved in Insider trading.

Defending attorney of Wahi requested the court to dismiss the case filed by the SEC on Coinbase and the former manager of one of the largest crypto exchanges.

Most recently, the SEC took action against prominent crypto exchanges. Kraken sent chills to the border crypto space. The take of the financial regulator for crypto staking signals others to take care of their business related to the same. Leading US crypto exchange Coinbase has clarified whether the SEC would come after chasing the crypto staking operations.