Beautiful Virgin Islands

Tuesday, Oct 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
This Is How the 'Heist of the Century' Was Carried Out at the Louvre in Seven Minutes: France Humiliated as Crown with 2,000 Diamonds Vanishes
China Warns UK of ‘Consequences’ After Delay to London Embassy Approval
France’s Wealthy Shift Billions to Luxembourg and Switzerland Amid Tax and Political Turmoil
"Sniper Position": Observation Post Targeting 'Air Force One' Found Before Trump’s Arrival in Florida
Shouting Match at the White House: 'Trump Cursed, Threw Maps, and Told Zelensky – "Putin Will Destroy You"'
Windows’ Own ‘Siri’ Has Arrived: You Can Now Talk to Your Computer
Thailand and Singapore Investigate Cambodian-Based Prince Group as U.S. and U.K. Sanctions Unfold
‘No Kings’ Protests Inflate Numbers — But History Shows Nations Collapse Without Strong Executive Power
Chinese Tech Giants Halt Stablecoin Launches After Beijing’s Regulatory Intervention
Manhattan Jury Holds BNP Paribas Liable for Enabling Sudanese Government Abuses
Trump Orders Immediate Release of Former Congressman George Santos After Commuting Prison Sentence
S&P Downgrades France’s Credit Rating, Citing Soaring Debt and Political Instability
Ofcom Rules BBC’s Gaza Documentary ‘Materially Misleading’ Over Narrator’s Hamas Ties
Diane Keaton’s Cause of Death Revealed as Pneumonia, Family Confirms
Former Lostprophets Frontman Ian Watkins Stabbed to Death in British Prison
"The Tsunami Is Coming, and It’s Massive": The World’s Richest Man Unveils a New AI Vision
Outsider, Heroine, Trailblazer: Diane Keaton Was Always a Little Strange — and Forever One of a Kind
Dramatic Development in the Death of 'Mango' Founder: Billionaire's Son Suspected of Murder
Two Years of Darkness: The Harrowing Testimonies of Israeli Hostages Emerging From Gaza Captivity
EU Moves to Use Frozen Russian Assets to Buy U.S. Weapons for Ukraine
Europe Emerges as the Biggest Casualty in U.S.-China Rare Earth Rivalry
HSBC Confronts Strategic Crossroads as NAB Seeks Only Retail Arm in Australia Exit
U.S. Chamber Sues Trump Over $100,000 H-1B Visa Fee
Shenzhen Expo Spotlights China’s Quantum Step in Semiconductor Self-Reliance
China Accelerates to the Forefront in Global Nuclear Fusion Race
Yachts, Private Jets, and a Picasso Painting: Exposed as 'One of the Largest Frauds in History'
Australia’s Wedgetail Spies Aid NATO Response as Russian MiGs Breach Estonian Airspace
McGowan Urges Chalmers to Cut Spending Over Tax Hike to Close $20 Billion Budget Gap
Victoria Orders Review of Transgender Prison Placement Amid Safety Concerns for Female Inmates
U.S. Treasury Mobilises New $20 Billion Debt Facility to Stabilise Argentina
French Business Leaders Decry Budget as Macron’s Pro-Enterprise Promise Undermined
Trump Claims Modi Pledged India Would End Russian Oil Imports Amid U.S. Tariff Pressure
Surging AI Startup Valuations Fuel Bubble Concerns Among Top Investors
Australian Punter Archie Wilson Tears Up During Nebraska Press Conference, Sparking Conversation on Male Vulnerability
Australia Confirms U.S. Access to Upgraded Submarine Shipyard Under AUKUS Deal
“Firepower” Promised for Ukraine as NATO Ministers Meet — But U.S. Tomahawks Remain Undecided
Brands Confront New Dilemma as Extremists Adopt Fashion Labels
The Sydney Sweeney and Jeans Storm: “The Outcome Surpassed Our Wildest Dreams”
Erika Kirk Delivers Moving Tribute at White House as Trump Awards Charlie Presidential Medal of Freedom
British Food Influencer ‘Big John’ Detained in Australia After Visa Dispute
ScamBodia: The Chinese Fraud Empire Shielded by Cambodia’s Ruling Elite
French PM Suspends Macron’s Pension Reform Until After 2027 in Bid to Stabilize Government
Orange, Bouygues and Free Make €17 Billion Bid for Drahi’s Altice France Telecom Assets
Dutch Government Seizes Chipmaker After U.S. Presses for Removal of Chinese CEO
Bessent Accuses China of Dragging Down Global Economy Amid New Trade Curbs
U.S. Revokes Visas of Foreign Nationals Who ‘Celebrated’ Charlie Kirk’s Assassination
AI and Cybersecurity at Forefront as GITEX Global 2025 Kicks Off in Dubai
DJI Loses Appeal to Remove Pentagon’s ‘Chinese Military Company’ Label
EU Deploys New Biometric Entry/Exit System: What Non-EU Travelers Must Know
Australian Prime Minister’s Private Number Exposed Through AI Contact Scraper
×