In an insider trading case involving Coinbase’s former product manager Ishan Wahi, his brother Nikhil Wahi, and their friend Sameer Ramani, a U.S. court ruled on March 1, that the trading of certain crypto assets on a secondary market, which Coinbase is, are securities transactions.
“The court’s analysis remains the same even to the extent Ramani traded tokens on the secondary market,” the ruling said. “... Each issuer continued to make such representation regarding the profitability of their tokens even as the tokens were traded on secondary markets. Thus, under Howey, all of the crypto assets that Ramani purchased and traded were investment contracts.”
The court took this critical position in a default judgment against Ramani. A default judgment is given when the defendant fails to respond to a court summons or does not appear in court.
“Ramani appears to have fled the country to avoid criminal prosecution for the actions alleged in this case,” the filing said.
In May 2023, the SEC settled charges with Ishan Wahi and Nikhil Wahi in what it has called the “first-ever insider trading case involving cryptocurrency markets.”
However, while this or some action against Ramani was expected, the judgment assumes extra significance because the crypto industry and Coinbase (COIN) have been arguing that cryptocurrencies are not securities and hence, do not fall under the SEC. The SEC Chair Gary Gensler has often argued that most cryptocurrencies fit the definition of securities and that crypto exchanges need to register with the SEC.
This is also not the first time a U.S. court has adjudicated whether sales of certain cryptocurrencies are unregistered securities, whether on secondary platforms like exchanges or not.
In July, Federal District Judge Analisa Torres ruled that while Ripple violated federal securities laws in selling XRP to institutional investors directly, it had not done so by making XRP available to retail customers through programmatic sales to exchanges.
However, in Dec. 2023, Judge Jed Rakoff disagreed with Judge Torres in the Terraform Labs case.
The court ruled to prohibit Ramani from future violations, a civil penalty of twice the amount of proceeds Ramani is calculated to have gained, which was a total of $1,635,204, and disgorgement of the identified proceeds amounting to $817,602. However, the court denied the SEC’s request to impose prejudgment interest.
Read More: Opinion: What’s Uniting the SEC’s Crypto Cases
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到[email protected]，本平台相关工作人员将会进行核查。
