Coinbase Submits Amicus Brief in SEC vs. Wahi Insider Trading Suit

Popular cryptocurrency exchange Coinbase has filed an Amicus Brief in the SEC vs. Ishan Wahi insider trading lawsuit. Chief Legal Officer, Paul Grewal took to Twitter and confirmed the filing. Wahi, alongside his kin, Nikhil, and their mutual acquaintance Sameer Ramani have all been charged by the SEC. The trio is accused of insider trading, wire fraud, and securities fraud.

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

Grewal claims that Coinbase does not list securities. Moreover, the exchange petitioned the SEC to create regulations for digital asset securities last year.

Grewal has accused the SEC of not developing rules or registration options. Instead, Grewal says, the agency “has prioritized actions […] that distort the legal definition of an investment contract beyond recognition.”

Since Wahi entered a guilty plea, Coinbase believed the insider trading and wire fraud allegations made by the U.S. prosecutors are valid. However, the exchange denies the allegations of securities fraud. Since the assets listed by the exchange are not securities and the SEC is focusing on what should be a criminal action, the exchange requested the court to dismiss the lawsuit.

The Blockchain Association trade organization also submitted an amicus brief to the court in mid-February. The group said that earlier regulation by enforcement through the SEC, made the United States an opaque and confusing jurisdiction for the digital assets market to conduct business.

Community not buying “Coinbase does not list securities” argument?

While many are in support of Coinbase’s decision, some are not buying the exchange’s argument. Many have pointed out that the exchange delisted XRP as the firm may believe that it is a security. Lawyer Bill Morgan took to Twitter and questioned the exchange on why XRP was initially listed, and later removed. If XRP was delisted because it is a security, then the exchange should not have listed it in the first place.

If you don’t list securities why did you delist XRP unless you think it is a security. If you do think it is a security why did you initially list it given @coinbase asserts its listing process is so rigorous. https://t.co/z1miI2EewO

— bill morgan (@Belisarius2020) March 14, 2023

Another user pointed out how the exchange could be so confident that it does not list securities when there are no clear rules on the subject.

All due respect @iampaulgrewal, how can you say CB doesn't list securities when the SEC continues to claim listed DAs on CB are securities, the industry continues to lack regulatory clarity, and the SEC's failure to publicly acknowledge the CB securities framework as sufficient?

— Jaffe Joffer, King (@1andOnlyTin) March 14, 2023