Increasing Regulatory Pressure on the Cryptocurrency Industry! US Court Rules that Crypto Secondary Markets are Considered Securities Trading.

Increasing Regulatory Pressure on the Cryptocurrency Industry! US Court Rules that Crypto Secondary Markets are Considered Securities Trading.

Increasing Regulatory Pressure on the Cryptocurrency Industry! US Court Rules that Crypto Secondary Markets are Considered Securities Trading.

Former Coinbase product manager Ishan Wahi, along with his brother Nikhil Wahi and friend Sameer Ramani, were sued by the US Department of Justice on July 21, 2022 for alleged insider trading. Both main defendants, Ishan Wahi and Nikhil Wahi, have pleaded guilty to criminal charges and reached a civil settlement with the US Securities and Exchange Commission (SEC).

However, Sameer Ramani has remained silent and has even failed to respond to the court summons. According to CoinDesk’s report, the court made a default judgment on March 1, stating that Sameer Ramani seems to have fled the United States to avoid criminal liability in this case. More importantly, the court ruled in this case that trading certain cryptocurrency assets on the secondary market constitutes securities transactions.

Although most market participants do not care about the progress of this case, the outcome of this ruling may provide more basis for enforcement actions by US regulatory agencies, such as the SEC, against the cryptocurrency industry. In particular, SEC Chairman Gary Gensler has consistently argued that most cryptocurrencies meet the definition of securities, and therefore cryptocurrency exchanges operating in the United States need to register with the SEC. The SEC’s litigation against Coinbase is still ongoing, and the ruling in this case may further strengthen the SEC’s enforcement position.