The Chamber of Digital Commerce moved to file an Amicus Brief regarding the ongoing court case between SEC and former Coinbase employees. According to the association, SEC’s accusations of the employees are unprecedented and stealthy. The case emerges from the SEC’s long-term objective known as regulation by enforcement. The Chamber conducted this filing exercise on February 22, 2023.
The SEC vs. Former Coinbase Employees
In July 2022, the SEC accused a former Coinbase manager and two other individuals of supporting insider trading activities. The allegation means that the three individuals (Ishan Wahi, Nikhil Wahi, and Sameer Ramani) were illegally trading securities.
Going by SEC’s press release, Ishan Wahi actively coordinated public listing announcements on behalf of Coinbase. The announcements included what assets would be made available to the public.
In SEC’s defense, Coinbase classified some crucial information and warned the platform not to continue with this trade.
The three employees, however, breached this rule as Ishan continuously tipped upcoming listing announcements to Nikhil and Sameer. SEC also accused the former Coinbase employees of profiting off several digital assets that gave them close to $1.1M.
Coinbase released an official statement to clear the air moments later. In a statement, the exchange said it disagrees with SEC’s actions regarding fraud charges because the platform doesn’t participate in listing securities.
The Chamber Fires Back
Based on the arguments made by the Chamber, the SEC is allegedly trying to enforce its campaign on the digital asset market unfairly. The association also mentions that the regulation by enforcement campaign is doing more harm than good to investors and the entire industry.
Therefore, the Chamber teamed up with a legal team at Winston & Strawn LLP to file a brief that could potentially stop the case. If the court moves to support SEC’s allegations, the digital currency market will face adverse implications. The inverse is true since the brief can stop SEC’s backdoor policies if the court dismisses the case.
Operating in a space with unclear guidelines creates confusion in the crypto world. However, the Chamber argues that there are proposed pieces of legislation in Congress. These pending proposals can help the government develop flexible rules that govern the digital asset market. Once the policies are set, there will be more innovation, consumer protection, and less uncertainty in the industry.
Unfortunately, the SEC isn’t significantly impacting this emerging economy. Instead of using its regulatory power to enforce flexible rules, the body is infiltrating the digital asset economy using lawsuits and enforcement activities.
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