US Court Declares Crypto Trades on Secondary Markets as Securities Transactions: A New Era for Digital Assets In a groundbreaking verdict, a U.S. court has made a significant ruling, stating that the trading of specific
cryptocurrency assets on secondary markets like Coinbase should be treated as
securities transactions.
The case that led to this decision involved former Coinbase product manager Ishan Wahi, his brother Nikhil Wahi, and their associate Sameer Ramani, who were accused of
insider trading.
The court highlighted that the tokens traded by Ramani were considered
investment contracts and thus qualified as securities due to the involvement of money, a common enterprise, and an expectation of profit from others' efforts.
While Ramani's actions went unanswered in court due to his apparent evasion of prosecution, the Wahi brothers managed to reach a settlement with the Securities and Exchange Commission (SEC) before this groundbreaking ruling was issued on June 1, 2023.
This case is not just another legal matter; it marks a significant milestone in the intersection of
traditional securities law and the ever-evolving realm of digital assets.
Back in July 2022, U.S. Attorney Damian Williams referred to this unprecedented case as the "First Ever Cryptocurrency Insider Trading Tipping Scheme," emphasizing that fraudulent activities in the crypto space will not go unchecked.
Williams made it clear that fraudsters will face consequences regardless of whether their actions occur on Wall Street or within the realms of Web3. The message is loud and clear:
fraud is fraud, no matter where it takes place.
