TD Cowen expects Gary Gensler to continue bringing crypto cases after SEC win in insider-trading lawsuit

Gary Gensler, the chairman of the United States Securities and Exchange Commission, is expected to continue bringing crypto cases following the agency's recent victory in a Coinbase insider trading lawsuit, according to investment bank TD Cowen.

Gensler "wants to bring litigation to clarify the law in advance of Congress establishing a regulatory regime for crypto," TD Cowen Washington Research Group, led by Jaret Seiberg, wrote in a note on Monday. The group expects Gensler to continue litigating for at least the next two years until his term ends in June 2026.

SEC's latest win

Last week, a federal judge in the Western District Court of Washington ruled in favor of the SEC in an insider trading case.

The case involved Coinbase's former product manager, Ishan Wahi, his brother Nikhil Wahi, and their friend Sameer Ramani. While the Wahi brothers settled, Ramani failed to respond to the SEC's complaint.

On Friday, the federal judge, Tana Lin, issued a default judgment against Ramani for trading based on inside information he obtained regarding which tokens Coinbase was planning to list. Lin ruled that the case fell under the SEC's jurisdiction because the crypto assets at issue were securities, even though they were traded on Coinbase, a secondary market.

"We view this as another win for the SEC," TD Cowen said in the note. "Each time judges spell out their assessments of the law, it gives lawmakers greater clarity on how to craft market structure legislation."

That's in line with Gensler's objective, TD Cowen said. While many criticize the SEC's enforcement approach and expect the agency to provide clarity for compliance with tokens and exchanges, TD Cowen, while acknowledging this perspective, states that "it doesn't really matter as the SEC is not changing course with Gensler in charge."

Gensler's expected actions may result in more conflicting decisions before Congress eventually addresses crypto market structure legislation, TD Cowen concluded.

U.S. lawmakers are currently working on legislation, including one focused on stablecoins and another more broadly on market structure, as The Block previously reported. Last month, U.S. Treasury Secretary Janet Yellen highlighted the risks associated with crypto platforms and stablecoins and urged Congress to pass legislation.