Coinbase Files Amicus Brief in Insider Trading Case

Coinbase has filed an amicus brief in the industry’s first case of insider trading involving cryptocurrencies. The exchange has called on the SEC for proper guidance and rules in its filing.

Crypto exchange Coinbase filed an amicus brief in the case involving one of its former employees, Ishan Wahi, who has pled guilty to insider trading. Wahi and his brother were charged with insider trading by the DOJ. Wahi and his brother have both pled guilty to the charges brought against them.

The case is also the subject of a civil complaint by the SEC for securities fraud regarding leaking information about new token listings on Coinbase. While the former Coinbase employee has pleaded guilty, he denies the SEC’s allegation of securities fraud and argues that the tokens in question were not securities. Wahi has called for the suit to be dismissed.

Coinbase’s chief legal officer, Paul Grewal, announced the filing in support of dismissing the “misguided suit.”

Last week I testified to Congress about Coinbase’s futile effort to register with the SEC so we can begin to offer digital asset securities. Today we filed an amicus brief in SEC v. Wahi that explains why this misguided suit only makes things worse. 1/5https://t.co/9iWYrWwpiI

— paulgrewal.eth (@iampaulgrewal) March 14, 2023

In its filing, Coinbase said the digital assets it lists are not securities but said if given proper rules and guidance from the SEC, it would like to list securities. Coinbase, however, said the SEC is somewhat unwilling to engage with it properly.

Grewal said in a Twitter feed:

Coinbase doesn’t list securities but we would like to. We even petitioned the SEC to begin rulemaking on this issue last year. We put forward 50 questions that would need to be answered for us to list securities – we haven’t heard back on any of them.

Coinbase’s brief reads:

The SEC’s suit rests on the erroneous premise that the seven Coinbase-listed assets identified in its complaint are ‘securities.’ But Coinbase does not list any securities on its platform.

It adds:

The SEC posits that the digital assets qualify as securities because they are “investment contract[s], but the assets lack both essential attributes of that statutory term: They are neither contracts nor investments.

Reports by CoinDesk indicate that Coinbase’s filing should not be regarded as support for Wahi but rather as an attempt to prohibit the SEC’s involvement in what should be a criminal matter.

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