Cryptocurrency exchange Coinbase filed an amicus curiae in support of a motion to dismiss the case brought by the United States Securities and Exchange Commission (SEC) against former Coinbase product manager Ishan Wahi and others for use of information. privileged. Coinbase condemns the defendants’ conduct, it says in the brief, but supports the defendants’ motion because the SEC assumes the exchange included securities on its platform.
Coinbase stated in its amicus (“friend of the court”) brief that it had fully cooperated with the investigation of Wahi, his brother and his friend and implied that he was also on trial in the case:
“The SEC asks this Court to adjudicate issues that are at the heart of Coinbase’s listing decisions. […] in litigation against uncaring individual defendants who stole non-public information from Coinbase.”
The exchange denied selling securities, but stated that it would like to sell digital asset securities, were it not for the “uncertainty status” in the regulation:
“Coinbase would like to expand its platform to include digital asset values (such as tokenized stocks), but no US company can do so until the SEC provides a clear regulatory framework.”
He also noted that the Justice Department did not file securities law charges against the defendants in his case. Ishan Wahi pleaded guilty in that case, and his brother also pleaded guilty.
Arguing that he does not sell securities, Coinbase said the SEC approved its public listing in 2021 without saying that the exchange’s business model would allow the sale of securities or that it would sell securities. Furthermore, Coinbase argued that their listing does not pass the oft-cited Howey test, established by the US Supreme Court in 1946, as they are neither investments nor contracts under it.
Coinbase also cited the material issues doctrine, reconfirmed by the US Supreme Court last year in West Virginia v. EPA, which sets limits on agency overreach. Industry advocacy groups, the Chamber of Digital Commerce and the Blockchain Associationhave raised similar issues in their own amicus curiae briefs.
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
Last week I testified before Congress about Coinbase’s futile effort to register with the SEC so it could start offering digital asset securities. Today we filed an amicus curiae brief in SEC v. Wahi explaining why this misguided demand only makes things worse.
Finally, the brief contends that the SEC’s actions violate “fundamental principles of fair notice and due process and raises serious concerns under the APA.” [Ley de Procedimiento Administrativo]”. “Coinbase seeks more engagement from the Securities and Exchange Commission with the cryptocurrency industry, not less. But that engagement must take the right form,” concludes.
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