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SEC, Coinbase and Insider Trading: Is Greater Regulation Needed?

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Another debate has flared up in the crypto Wild West.

The SEC recently claimed that Coinbase lists nine digital assets that are actually unregistered securities. The SEC's formal complaint was filed against a former Coinbase product manager who allegedly made over a million dollars through an insider-trading scheme

Coinbase, however, disputes the claim.

In a blog post from chief legal officer Paul Grewal, the company said that it disagrees with the SEC's decision to file the securities fraud charges. Grewal noted in the post that Coinbase does not list securities on its platform.

Is this just yet another sign that formalized crypto regulation is desperately needed?

FULL VIDEO TRANSCRIPT BELOW:

The SEC has claimed that Coinbase lists nine digital assets that are actually unregistered securities. The SEC's formal complaint was filed against a former Coinbase product manager who allegedly made over a million dollars through an insider-trading scheme.

The DOJ charged Ishan Wahi, Nikhil Wahi and Sameer Ramani with wire fraud. The SEC claims that nine of the 25 tokens that had been traded in the scheme counted as securities. Coinbase, however, disagrees. In a blog post from Chief Legal Officer Paul Grewal, the company said that it disagrees with the SEC's decision to file the securities fraud charges. Grewal notes in the post that Coinbase does not list securities on its platform.

So why is this notable? Well, as Commodity Futures Trading Commissioner Caroline Pham put it, the charges show an example of "regulation by enforcement" and enforcing such regulation could mean that Coinbase has to classify some cryptos as securities, which means that they'd have to undergo disclosure and registration requirements, which can be quite the process. And though Coinbase themselves noted that a "formal rule-making process" is desperately needed, this approach may not be the way to tame, as SEC chair Gary Gensler put it, the wild west…

I’m Katherine Ross and that was the Crypto Minute on TheStreet. 

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