The Chamber of Digital Commerce, a US-based blockchain advocacy group, has urged a federal court to dismiss a case brought by the Securities and Exchange Commission (SEC) against a former Coinbase employee accused of insider trading. , arguing that the case incorrectly classified several crypto assets as securities, in a amicus brief filed Wednesday.
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- The Chamber of Digital Commerce argued that the case is being used as a “backdoor” attempt to define certain crypto assets as securities in the absence of clearer regulations from Congress.
- The SEC brought the charges in July against former Coinbase product member Ishan Wahi and two others for allegedly profiting from at least 25 crypto assets based on insider knowledge, nine of which the agency says are securities. Wahi and his co-defendants filed a motion to dismiss the case on February 6, arguing that their sales of digital assets fell outside the enforcement jurisdiction of the SEC.
- The Chamber of Digital Commerce said in the amicus filing that if the case goes ahead, the crypto exchanges offering the nine tokens could be subject to state and federal regulatory action and private litigation. The advocacy group said investors would be harmed by the value of assets that would be affected and blockchain companies could move to foreign jurisdictions.
- A amicus brief is a document filed in court by a person or organization that is not a party to the case but is seeking permission to submit a statement intended to influence the court’s decision. The Blockchain Association, another US-based crypto trading group, also filed an amicus brief in the case earlier this month.
- The SEC recent crackdown on the crypto industry has been criticized as ‘regulation by execution‘ as the agency’s cases against digital asset firms mount. The SEC has maintained that pre-existing securities laws could also apply to certain cryptocurrencies and digital assets.
- Wahi also faced criminal charges for wire fraud and insider trading. The former Coinbase employee pleaded guilty to two counts of conspiracy to commit wire fraud earlier in February.
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