Coinbase filed an amicus (“friend of the court”) brief in support of a motion to dismiss the SEC’s insider trading prosecution of former Coinbase product manager Ishan Wahi and others.
Coinbase completely cooperated with the investigation of Ishan Wahi, his brother, Nikhil Wahi, and also indicates that it is under judgment in the case as well. The SEC asks this Court to – “Adjudicate issues at the heart of Coinbase’s listing decisions for seven assets, and in litigation against unsympathetic individual defendants who stole Coinbase’s nonpublic information.”
The exchange denies selling securities but states that if regulation were not in a “state of uncertainty” it would like to sell digital asset securities.
“Coinbase would like to expand its platform to include digital-asset securities (such as tokenized stocks), but no U.S. company can do so until the SEC provides a clear regulatory framework.”
Arguing that it does not sell securities, Coinbase says the SEC approved its public share listing in 2021 without saying the exchange’s business model could allow the sale of securities or that it sold securities.
Coinbase has stated that it condemns the defendants’ actions but supports their petition because the SEC assumed the exchange listed securities on its platform.
Further, Coinbase argues, its listings do not pass the often-cited Howey test (a transaction qualifier test for investment contract), established by the U.S. Supreme Court in 1946, as they are neither investments nor contracts under it. It seeks more engagement by the Securities and Exchange Commission with the cryptocurrency industry, not less.
Also read: Binance Accused of Insider Trading by Coinbase Director
