The SEC listed nine out of 25 tokens as ‘securities’ in a recent insider trading case against a former Coinbase employee.
Nine tokens listed as securities by SEC are Flexa’s AMP, RLY, DDX, XYO, RGT, LCX, POWR, DFX and KROM.
Apparently, the former Product Manager of Coinbase has shared the inside information to his brother and friend about the assets which the company had planned to list on its exchange.
In the past, when the SEC identified cryptocurrencies as Securities, it did so in the enforcement of settlements.
However, it is the first time that cryptocurrencies have been identified as securities without charging the issuer.
Additinally, Attorney Jason Gottlieb of Morrison Cohen LLP stated that the issuers, Coinbase and any other exchanges that may have listed the cryptocurrencies deemed securities “aren’t parties” to the action, which implies that they may not be able to challenge the SEC’s determination in court.
Coinbase has clarified on its part that none of the cryptocurrencies that it lists are securities.
In a Coinbase’s blog that was originally published in April but was updated on Thrsday stated “The SEC charges are an unfortunate distraction from today’s appropriate law enforcement action.”
On the other hand, the United States Commodity Futures Trading Commission (CFTC) has expressed concerns about the possible implication of SEC including cryptocurrencies as securities.
Coinbase while filing a petition with the SEC has asked to update the rulemaking process and how federal securities law would apply to crypto assets.
It also stated in a blog post that, ” Securities law is thus not well-suited to govern digital assets. Attempted application of such ill-fitting laws to crypto creates a number of problems.”
