Coinbase Insider Trading Case: Chamber Of Digital Commerce CEO Accuses SEC Of “Backdoor Rulemaking”

The Chamber of Digital Commerce attempts to prevent the U.S. Securities and Exchange Commission’s (SEC) insider trading case against a former Coinbase employee. The trade association’s founder, Perianne Boring, stated that numerous digital assets could be classified as securities if the SEC wins the case.

Join @PerianneDC TOMORROW at 9:00 AM ET on @CoinDesk TV to discuss the @DigitalChamber‘s amicus brief in the SEC v. Wahi case and the future of #crypto regulation. pic.twitter.com/FYEJGRrGWu

— Chamber of Digital Commerce (@DigitalChamber) February 23, 2023

However, Boring believes the SEC’s actions are a form of “backdoor rulemaking” that doesn’t provide any guidance for defining digital asset transactions as securities.

SEC vs. Coinbase Employee

Last year, the DOJ charged former Coinbase manager Ishan Wahi with wire fraud for providing information about which coins would be listed on the crypto exchange’s platform before they went live with his brother and a friend.

The SEC then filed the same insider trading charges against the trio. If the SEC wins, nine of the trio’s 25 crypto assets might be classified as securities.

Boring stated that this could lead to additional legal battles for other crypto companies that list the tokens. Binance, the world’s largest crypto exchange, contributes to the association’s legal filing.

Attempts to Dismiss SEC Case

Furthermore, Wahi has already pleaded guilty to insider trading charges, while his brother has pleaded guilty to wire fraud conspiracy charges.

However, Wahi’s lawyers have filed a motion to dismiss the SEC’s securities fraud charges, claiming that the tokens listed were utility-based and not investment contracts. Boring believes that the SEC’s case against Wahi may be redundant since the DOJ has already indicted them.

However, she clarified that her association isn’t trying to downplay the seriousness of insider trading. Boring asserted that it is imperative to hold accountable anyone who breaks the law.  A ruling favoring the SEC could negatively affect the digital asset ecosystem.

According to Boring, the only regulatory guidance provided by the SEC has been in the form of nonbinding speeches and statements conflicting from administration to administration.

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Boring expressed that the U.S. Securities and Exchange Commission (SEC) has failed to provide clear regulatory guidance for the digital asset industry. Boring stated that the only guidance provided by the SEC so far has been through nonbinding speeches and statements.

Additionally, which have been inconsistent from one administration to another. This lack of clarity has created confusion and uncertainty for businesses operating in the crypto space. Boring’s comments were made in relation to the SEC’s ongoing insider trading case against a former Coinbase employee.