coinspress.com
In the ongoing legal proceedings concerning alleged insider trading at Coinbase, a US judge has ruled that transactions involving the resale of cryptocurrencies on secondary markets are to be treated as securities transactions.
Legal action initiated by the Securities and Exchange Commission (SEC) in July 2022 targeted Ishan Wahi, a former product manager at Coinbase, accusing him of sharing confidential information about upcoming cryptocurrency listings with his brother Nikhil Wahi and a friend named Sameer Raman.
Subsequently, Ishan Wahi and his brother Nikhil Wahi agreed to settle with the SEC over allegations of participating in an insider trading scheme related to cryptocurrencies.
Recent court filings reveal that transactions conducted by the Wahi brothers and Raman are being classified as investment contracts under legal scrutiny.
The court noted that despite these assets being traded on secondary markets, representations about their profitability persisted, leading to their classification as investment contracts according to the Howey test.
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Raman, however, has been subject to a default judgment as he failed to respond to legal summons and is reportedly out of the country.
The judge emphasized that based on the allegations presented in the First Amended Complaint (FAC), Raman had engaged in trading activities using material nonpublic information obtained through Ishan Wahi’s breach of duty as a Coinbase manager.
The judge concluded that Raman’s actions constituted misconduct associated with the purchase and sale of securities, as the tokens traded were initially offered and sold as investment contracts, thus qualifying as securities under the law.