John Deaton sees Coinbase as the next possible target for the SEC.
John Deaton, on Wednesday, in an interview on The CLAMAN COUNTDOWN on Fox Business, predicts that the US SEC will soon go after Coinbase or another crypto exchange as part of its crypto enforcement efforts.
“I believe Gary Gensler is going to sue in exchange, whether it’s Coinbase, or Binance or another exchange in the United States by the end of the year,” said Deaton as he explained that SEC wrongfully appears to think that the crypto industry is full of bad actors.
On Thursday, the SEC and the Department of Justice filed independent cases against a former Coinbase product manager and two others in an alleged insider trading scheme. According to the filing by the DoJ, Ishan Wahi, who gained employment at Coinbase in October 2020 as a product manager assigned to an asset listing team, from June 2021 to April 2022, on at least 14 occasions, broke Coinbase policy and tipped his brother Nikhil Wahi or his friend Sameer Ramani on the coins to be listed on the leading exchange.
Today we announced insider trading charges against a former Coinbase product manager, his brother, and his friend for perpetrating a scheme to trade ahead of multiple announcements regarding certain crypto assets that would be made available for trading on the Coinbase platform.
— U.S. Securities and Exchange Commission (@SECGov) July 21, 2022
As per the filing, all parties involved used this information to purchase these coins in advance, making gains of about $1.5 million within the period.
However, while both the SEC and the DoJ filings charge only Wahi and his associates, the SEC filing takes a worrying angle as it labels 9 of the assets listed by Coinbase as securities.
“We are not concerned with labels, but rather the economic realities of an offering,” Director of the SEC enforcement unit Gurbir S. Grewal said, however, adding, “In this case, those realities affirm that a number of the crypto assets at issue were securities, and, as alleged, the defendants engaged in typical insider trading ahead of their listing on Coinbase. Rest assured, we’ll continue to ensure a level playing field for investors, regardless of the label placed on the securities involved.”
The nine crypto assets fingered by the SEC as securities include; Power Ledger’s POWR token, Flexa’s AMP token, Rally’s RLY token, DerivaDEX’s DDX token, XY Labs’ XYO token, Rari Capital’s RGT token, Liechtenstein Cryptoassets Exchange’s LCX token, DFX Finance’s DFX token, and Kromatika Finance’s KROM token.
Notably, in response, Coinbase has denied claims that assets listed on its platform are securities. “No assets listed on our platform are securities, and the SEC charges are an unfortunate distraction from today’s appropriate law enforcement action,” Coinbase wrote in an update to its blog on Thursday.
Furthermore, the leading exchange has petitioned the US SEC to create clear rules for securities in the emerging market as it believes the old rules in traditional finance can not apply.
It is worth noting that the SEC is currently locked in a legal battle with Ripple as it claims the XRP token issued by the firm constitutes unregistered security. These cases could prove to have wide-reaching effects on the crypto markets on what constitutes a security and how much enforcement powers the SEC is given over the sector.
John Deaton currently represents XRP holders in the capacity of an amicus curiae in the Ripple case.
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Source: https://thecryptobasic.com/2022/07/22/is-the-sec-going-to-sue-coinbase-attorney-john-deaton-thinks-so/?utm_source=rss&utm_medium=rss&utm_campaign=is-the-sec-going-to-sue-coinbase-attorney-john-deaton-thinks-so