Beautiful Virgin Islands

Monday, Apr 21, 2025

Coinbase insider trading case sparks tug-of-war between SEC and CFTC

Coinbase insider trading case sparks tug-of-war between SEC and CFTC

Caroline Pham of the Commodity Futures Trading Commission appeared to criticise her colleagues at the Securities and Exchange Commission over a case of crypto insider trading as the two battle for regulatory oversight.
Coinbase insider trading case in the middle of a regulatory tug-of-war for control over the prestigious task of regulating crypto assets.

The Securities and Exchange Commission charged on Thursday a former Coinbase product manager and two associates with securities fraud.

The trio had allegedly made off with over $1 million in illicit profits based on sensitive and confidential corporate information. Two of them have been arrested—one while he was attempting to leave the country—and are now held in U.S. law enforcement custody.

There’s just one problem.

Coinbase says the men could not have possibly committed securities fraud, because Coinbase doesn’t even offer clients the ability to trade securities. More to the point, the Justice Department and the Commodity Futures Trading Commission appear to think so as well, the crypto exchange claims.

“The DOJ reviewed the same facts and chose not to file securities fraud charges against those involved. As CFTC Commissioner Caroline Pham stated, this is a ‘striking example of regulation by enforcement’ by the SEC,” wrote the company’s chief legal officer, Paul Grewal in a post published on Friday entitled “Coinbase does not list securities. End of Story”.

The case, SEC vs Wahi, is shaping up into a regulatory tug-of-war pitting the CFTC against the SEC, and reopens the debate over which regulatory bucket a digital coin or token falls into and which U.S. agency will win the high-profile task of providing oversight.

Read my statement on #SEC v. Wahi, regulation by enforcement & #CFTC authority #crypto #digitalassets #DAO pic.twitter.com/xbHvyshx8l

— Caroline D. Pham (@CarolineDPham) July 21, 2022

“Instead of crafting tailored rules in an inclusive and transparent way, the SEC is relying on these types of one-off enforcement actions to try to bring all digital assets into its jurisdiction, even those assets that are not securities,” argued Grewal.

Meanwhile, Commissioner Pham of the CFTC seemed to criticize the SEC in a statement posted on social media.

"The SEC’s allegations could have broad implications beyond this single case, underscoring how critical and urgent it is that regulators work together," she wrote.
Not concerned with labels

Currently, Coinbase believes the SEC, an agency with a long reach, is staking its claim to that prize. Without a clear set of guidelines that provide a level playing field and legal certainty, this piecemeal approach of one-off enforcement actions by the SEC could potentially stifle the innovation in the crypto industry, it fears.

Coinbase's chief policy officer, Faryar Shirzad, wrote in a separate post that the SEC's intervention has created “enormous risk” for investors, citing the case of Ripple’s native token XRP suddenly being deemed by the SEC a security.

“We saw this in vivid detail when the Commission brought an enforcement action against Ripple, after years of taking no action against them,” Shirzad wrote. “The XRP case is especially notable because there was disagreement even within the federal government about whether XRP was a security or not: FinCEN [Financial Crimes Enforcement Network] had determined it was not a security, and then the SEC said that it was.”

The regulatory treatment of crypto is a controversial one. Michael Saylor, CEO of MicroStrategy the largest publicly-known holder of Bitcoin, recently argued that only Bitcoin fits the description of a commodity as it lacks an issuer, product development, employees, or a management team.

All other cryptocurrencies are by comparison little more than “unregulated securities” in his book. That’s because they fit the broad description: There is typically a team behind them attempting to add functionality to their coins and tokens, as well as encouraging a decentralized system of third-party applications to build on top of their blockchains' base layer of code.

Grewal counters by saying Coinbase does an extensive review of each asset it lists. In the process the company weeds out whatever could potentially be deemed a security that would fall under the SEC’s purview. As a result, his company has been actively cooperating with the DOJ, which is pursuing the case not as securities fraud but as wire fraud.

“The SEC’s charges put a spotlight on an important problem: the U.S. doesn’t have a clear or workable regulatory framework for digital asset securities," Grewal wrote.

It also raises the issue over whether U.S. financial markets may eventually find themselves at a disadvantage to other jurisdictions, notably the European Union, that have already implemented a legal framework to give issuers certainty.

The SEC's director for the Division of Enforcement, Gurbir Grewal (not related to Paul Grewal) was unmoved by the debate.

“We’re not concerned with labels, but rather the economic realities of an offering,” he said in a statement. “Rest assured, we’ll continue to ensure a level playing field for investors, regardless of the label placed on the securities involved.”
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Prince Andrew Joins Royal Family Attends Easter Sunday Service at Windsor Castle
Saudi Arabia Offers Max Verstappen Unprecedented Deal to Join Aston Martin
Global Pistachio Shortage Amid Rising Demand for 'Dubai Chocolate'
Trump is assembling a coalition of Western leaders aligned with the MAGA vision, strengthening a unified front for global change
IMF Predicts No Global Recession Amid Trade Tensions
Here’s a police officer with a brilliant gift for swift education
"Some complain that we put thousands in prison. In reality, we set millions free."
This is Vienna, Austria in 2025.
Boeing Jet Returns to US from China Amid Tariff War
Canadian Federal Election: Candidates' Positions on US-Canada Relations and Donald Trump
Resentencing Hearing for Menendez Brothers Who Killed Their Parents Delayed Amid Legal Disputes
Australian Woman Gives Birth To Stranger's Baby In IVF Mix-up
US Sets Deadline for Russia-Ukraine Peace Deal Brokerage
Italy Introduces 'Sex Rooms' in Prisons for Inmates
California Launches Legal Challenge Against Trump Administration's Tariffs
"Groundless": China Dismisses Zelensky's Claims It's Supplying Arms To Russia
UK Psytrance Festival Cancelled Amid Local Protests Over Noise Concerns
French Far-Right Writer Renaud Camus Denied Entry to UK
UK Police Force Updates Search Policy for Trans Individuals in Custody
Italian Prime Minister Giorgia Meloni Meets with Donald Trump to Discuss EU-US Trade Tensions
Canada's Federal Party Leaders Engage in Final Debate Ahead of General Election
Ukraine and US Sign Outline of Minerals Deal
Fast Food Chain Refuses to Apologize for Online Comment About Katy Perry's Space Voyage
New York Attorney General Letitia James Faces Criminal Referral for Alleged Mortgage Fraud
Mark Cuban admits support for Trump executive order: ‘Gotta be honest’
US Senator Meets with Deported Immigrant in El Salvador Amid Custody Dispute
U.S. State Department Raises El Salvador’s Safety Ranking, Making It Safer Than France and Other European Nations
UK Government Assumes Control of British Steel's Scunthorpe Plant Amid Shutdown Threat
UK MP Wera Hobhouse Denied Entry to Hong Kong During Family Visit
Bangladesh Issues Arrest Warrant for UK MP Tulip Siddiq
China Urges United States to Cancel Tariffs Amid Escalating Trade Tensions
The Empire’s USD Pyramid Scheme Is Working Brilliantly—So Why ‘Fix’ It?
China Raises Tariffs on U.S. Goods to 125% Amid Escalating Trade Dispute
Elon Musk Reports $150 Billion in Projected Government Savings Amid Fraud Investigations
U.S. and Panama Finalize Defense Agreements Amid Canal Access and Chinese Influence Concerns
China Stands Firm Amidst Trade Disputes with the US: A Factual Analysis
U.S. Tariff Escalation Sparks Global Trade Tensions
Helicopter crashes in NYC with four people on board.
Australia Dismisses China's Suggestion to Collaborate Against US Tariffs
EU Postpones Response to US Tariffs
The Trump Administration is contemplating removing Chinese companies from U.S. stock exchanges.
Violent Incidents and Public Safety Concerns Escalate in London and County Durham
UK MP Arrested on Suspicion of Rape and Child Sex Offences
UK Gears Up to Respond to US Tariffs with Industrial Strategies and Trade Initiatives
‘Rocky’ star Dolph Lundgren and his wife Emma Krokdal bask in the Miami sunshine following the actor’s lengthy health struggles.
Spain Encounters Countrywide Protests as Housing Crisis Intensifies
Alisha Lehmann's Modeling Campaign and Public Controversy Stir Debate Ahead of UEFA Women's Euro
U.S. Firms with Major International Revenue Exposure in Light of New Tariffs
President Trump Calls on the Federal Reserve to Reduce Interest Rates in Light of New Tariffs
President Trump Prolongs TikTok Sale Deadline by 75 Days
×