In a recent development in the Coinbase insider trading case, a US judge has declared that secondary market sales of crypto assets are considered securities transactions. The case involves former Coinbase product manager Ishan Wahi and his brother, Nikhil Wahi, who were accused of giving confidential information about supported crypto assets to a friend, Sameer Raman.
According to court documents, the exchanges made by the Wahi brothers and Raman qualify as investment contracts. The judge stated, “Under Howey test, all of the crypto assets that Raman purchased and traded were investment contracts.” Raman, who failed to respond to a court summons and has reportedly fled the country, was issued a default judgment.
The judge further explained that Raman traded on material nonpublic information provided to him in breach of Ishan Wahi’s duty as a Coinbase manager, and his misconduct was in connection with the purchase and sale of securities. The tokens traded by Raman were offered and sold as investment contracts, making them securities.
This ruling highlights the increasing scrutiny on insider trading in the cryptocurrency market and serves as a reminder for investors to conduct due diligence before making high-risk investments. Stay updated on this developing story by subscribing to email alerts from The Daily Hodl.
