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SEC takes long-feared position in Coinbase insider trading suit – londonbusinessblog.com

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A former Coinbase product manager has been arrested, the US Department of Justice announced on Thursday after he was charged in an insider trading cryptocurrency related to the listing of new crypto tokens on the Coinbase exchange. A separate filing of the case by the SEC signals the beginning of a major battle with crypto companies over what should be classified as a security.

A press release said former Coinbase employee Ishan Wahi and his brother Nikhil Wahi were both arrested while their friend Sameer Ramani was charged but had not been found. Ishan Wahi has been charged with two counts of wire fraud conspiracy and two counts of wire fraud, while Nikhil Wahi and Sameer Ramani were both charged with one count of wire fraud conspiracy and one count of wire fraud.

While the DOJ’s charges do not include securities fraud counts, it is interesting that in separate indictments filed by the SEC, some of the assets traded by the group are classified as crypto asset securities, a classification that sure will have a lot. have implications for the crypto industry if it sticks.

Specifically, the SEC has framed the following assets as securities: 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, token Finance’s DFX Kromatika Finance’s KROM token.

In a Archive 62 pagesSpecifically, the SEC is targeting the listed companies and tokens, saying that “Nikhil and Ramani traded securities subject to federal securities laws because these crypto assets were investment contracts; they were offered and sold to investors who have invested money in a joint venture, with a reasonable expectation of profit to be made from the efforts of others.”

The SEC classifying crypto assets as securities more widely could pose a major threat to the crypto industry, which has gained momentum thanks to relaxed regulatory guidelines around commodities, which many insiders have argued should be tokens as such. classified. In response to the SEC’s suit, Coinbase announced that they had petitioned to develop new frameworks for crypto security rules.

The arrests follow a saga largely played out on Twitter where a crypto personality going by Cobie discovered a wallet that had been used to buy up a number of cryptocurrencies prior to the announcement of a Coinbase listing of those assets on his purse.

A Justice Department investigation revealed that Wahi and his associates had traded on Coinbase prior to at least 14 asset listings, making gains of about $1.5 million. The group had purchased cryptocurrencies with accounts registered with other people and had transferred funds “through multiple anonymous Ethereum blockchain wallets,” according to the press release. Apparently, after investigating the transactions, Coinbase contacted Ishan Wahi about scheduling an asset listing process meeting and Wahi attempted to leave the country but was stopped by law enforcement before boarding.

This arrest follows the arrest in June of OpenSea Director Nate Chastain, who was also charged with insider trading involving NFTs.

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