In a significant development in cryptocurrency law, a US court has ruled against Sameer Ramani, a defendant in a doxxing case involving Coinbase's former product manager Ishan Wahi and his brother Nikhil Wahi.
US Judge Rules Secondary Market Sales in Coinbase Insider Case Are Securities Transactions
The ruling suggests that transactions involving certain crypto assets on secondary markets, including Coinbase, should be classified as securities transactions.
The court's decision, which ruled against Ramani for failing to respond to subpoenas or appear in court, underscores a critical stance on the classification of crypto assets.
The decision clearly states, “Each issuer continued to make such representation regarding the profitability of its tokens even while the tokens were traded in secondary markets. Therefore, under Howey, all of the crypto assets that Ramani purchased and traded were investment contracts.”
The court considers that Ramani escaped prosecution by fleeing the country because he did not take part in legal proceedings.
This decision follows a settlement between the US Securities and Exchange Commission (SEC) and Ishan Wahi and Nikhil Wahi signed in May 2023, described by the SEC as the “first insider trading case involving cryptocurrency markets.”
The decision takes on added significance amid ongoing debates surrounding the regulatory classification of cryptocurrencies.
While the crypto industry and Coinbase have argued that cryptocurrencies do not constitute securities and therefore fall outside the SEC's jurisdiction, SEC Chairman Gary Gensler has consistently argued otherwise, claiming that most cryptocurrencies meet the definition of a security.
*This is not investment advice.
