SEC lists nine crypto tokens as securities following Coinbase insider trading charges

Quick Take

  • The SEC has arrested and charged a former Coinbase employee with wire fraud.
  • In the SEC complaint, it mentions nine tokens and says they are all securities.

The Securities and Exchange Commission (SEC) has listed nine cryptocurrencies that it says are securities. This was contained within a complaint arresting and charging a former Coinbase employee and two others with wire fraud.

The assets were: AMP, RLY, DDX, XYO, RGT, LCX, POWR, DFX, KROM. They were each mentioned in connection with alleged insider trading.

"Our message with these charges is clear: fraud is fraud is fraud, whether it occurs on the blockchain or on Wall Street,” wrote the SEC in its complaint.

This is one of few examples from the SEC where it has named specific cryptocurrencies as securities; it has provided little clarity over the years.

Initially, former SEC Chairman Jay Clayton said that bitcoin was not a security. Then former SEC director of corporation finance William Hinman said that ether did not exhibit properties of a security. Current SEC Chairman Gary Gensler more recently undermined that latter view, saying bitcoin was the only token that he felt comfortable calling a commodity. The SEC has also sued Ripple for allegedly selling unregistered securities, referring to the token XRP.

The complaint today implies that the SEC is largely keeping with the view that the majority of cryptocurrencies are securities.

“We are not concerned with labels, but rather the economic realities of an offering,” said Gurbir Grewal, director of the SEC’s Division of Enforcement. “In this case, those realities affirm that a number of the crypto assets at issue were securities, and, as alleged, the defendants engaged in typical insider trading ahead of their listing on Coinbase. Rest assured, we’ll continue to ensure a level playing field for investors, regardless of the label placed on the securities involved.”

Coinbase takes a different view

Just prior to the SEC filings coming out, Coinbase released a blog post of its own (later saying that this was posted without prior knowledge of the charges). In it, Coinbase chief policy officer Faryar Shirzad said today that laws in the US are not keeping up with the digital world and need fixing.

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