- The Chamber of Digital Commerce has demanded that the SEC withdraw its case against the Coinbase inside traders
- The group claims that the SEC is acting beyond its purview and that it has no right to oversee the crypto space
- Nikhil and Ishan Wahi have already pleaded guilty to insider trading through the exchange
The Chamber of Digital Commerce has demanded that the Securities and Exchange Commission (SEC) drop its insider trading claims against former Coinbase product manager Ishan Wahi, claiming that the agency lacks the authority to oversee the case. The group, a non-profit association that seeks to educate government officials on the use of crypto and blockchain, filed an amicus brief in the case in which it argued that the SEC has “never been granted” the powers to oversee the digital asset sphere, and that it likely never would. Their case is complicated by the fact that Ishan and his brother Nikhil have both pleaded guilty to the crimes.
SEC is Acting Beyond its Remit
Nikhil and Ishan Wahi and their associate Sameer Ramani were accused by the SEC of profiting from inside information about upcoming coin listings from Ishan, with the brothers arrested in July 2022. Nikhil pleaded guilty to conspiracy to commit wire fraud while Ishan initially chose to fight, before changing to a guilty plea earlier this month. Ramani is still at large.
However, the Chamber of Digital Commerce has called for the judge to throw out the case anyway, arguing that the SEC is acting beyond its means:
Under Supreme Court precedent, the agency’s authority to expand its regulatory writ to virtually all transactions touching upon a digital asset is a major question requiring clear Congressional authorization. But the SEC has never been granted such authority, and legislation pending before Congress makes very clear that it likely never will be.
“Unprecedented Stealth Attempt” Criticized
In a blog post explaining the filing, the group summarized the SEC’s move as an “unprecedented, stealth attempt to expand the agency’s jurisdictional reach” and that it represented “a new front in the SEC’s longstanding “regulation by enforcement” campaign”. The core of this claim comes partly from the fact that in its filing the SEC labeled nine of the cryptocurrencies involved as securities, despite it never actually ruling on the matter – it just said that they were, with no opportunity for the operators of these coins to defend the claim.
The blog post noted that the group was not trying to seek absolvement for the Wahi brothers, who should be punished for their crimes, but that the operators of the projects whose coins were abused should not also face their own form of punishment too.
