Is the SEC gearing up for an offensive against cryptocurrencies? A statement from a prominent American billionaire suggests that such a scenario could take place.
SEC’s undisclosed position
A recent tweet by Senator Pat Toomey, commenting on the SEC’s accusations against one of Coinbase’s former employees, caused quite a stir.
In it, the Senator writes:
“Yesterday’s enforcement action is a prime example of the SEC having a clear view of how and why certain tokens classify as securities. However, the SEC did not disclose its position prior to the enforcement proceedings.”
The topic has not escaped well-known businessman and billionaire Mark Cuban, who commented as follows:
“Think it’s bad? Wait until you see what they come up with for token registration. It’s a nightmare waiting to happen for the crypto industry. How else can they hire thousands of lawyers and create reasons to ask for more taxpayer money?”
At first glance, this exchange sounds rather mysterious. At the source, however, it makes more sense.
What is the SEC playing at?
On Thursday, July 21, the SEC announced charges against former Coinbase employee Ishan Wahi, as well as his brother and a friend. They were charged with insider trading and insider trading.
“Today we announced insider trading charges against a former Coinbase product manager, his brother and a friend for committing a pattern of trading ahead of multiple announcements regarding certain crypto assets that will be made available for trading on the Coinbase platform.
The total value of the profits they generated, was said to have reached $1.5 million. Their actions were simple – they bought cryptocurrencies just before they were listed on the exchange and dumped them back on the market shortly thereafter. Interestingly, according to the SEC, at least 9 of the 25 tokens the trio bought were unregistered securities. So does the SEC have a ready-made definition for specific tokens and doesn’t want to share it with the world?
Coinbase, as a company listed on a traditional trading floor, pays special attention to the transparency of its operations. On that account, it supported the SEC in investigating and apprehending the perpetrators of the crime. Nevertheless, the SEC’s argumentation did not fully appeal to representatives of the exchange. As the blog post reads:
“7 of the 9 assets included in the SEC’s allegations are still listed on the Coinbase platform. None of these assets are securities.”
In doing so, the exchange stipulated that each listed asset is subject to rigorous analysis even before it is made available on the platform. In addition, the SEC itself managed to review the process beforehand and raised no objections to it.