Coinbase counters use of default judgment ruling in SEC lawsuit
Quick Take
- Coinbase hit back against the SEC after the agency said it wanted to inform the court of a default judgment made last week that said the trading of certain crypto assets on secondary markets were securities.
- In a notice filed on Tuesday, Coinbase said the default judgment shouldn’t hold weight.
Coinbase is countering the Securities and Exchange Commission's efforts to leverage a decision from an insider trading case to bolster the agency's lawsuit against the cryptocurrency exchange.
In a notice filed on Tuesday, Coinbase hit back after the SEC a day earlier said it wanted to inform the court of a default judgment made last week by another court. That ruling said that the trading of certain crypto assets on secondary markets constitutes securities trading.
The insider trading case came to a close last week after a judge granted a default judgment, meaning a defendant has failed to appear before the court. The case involved Sameer Ramani, who was friends with former Coinbase product manager Ishan Wahi and his brother, Nikhil Wahi. In the ruling made on March 1, Judge Tana Lin said the default judgment was warranted in part because Ramani appeared to have fled the country.
Coinbase said the default judgment should not hold any weight, according to Tuesday's filing.
"The Wahi order was procured against an empty chair and its reasoning reflects as much. Coinbase respectfully submits that the default judgment against Mr. Ramani should be afforded no weight," Coinbase said.
Coinbase also said the SEC's motion for a default judgment did not mention the Ripple case or include an "analysis of transactions on the secondary market."
The Ripple case gave the crypto industry a partial win last year after the SEC sued the firm over what it said were unregistered sales of 
XRP
-1.90%
. A judge then ruled in July of 2023 that the sales of XRP to institutional investors were unlawful securities sales, but "blind bid" sales to retail were not.
Past lawsuits
The SEC previously accused Ishan Wahi of leaking information about the timing of the exchange's public listing announcements, including details on which cryptocurrencies would be available for trading, to both his brother and Ramani. Ishan and Nikhil Wahi reached a settlement with the SEC last May over charges that they engaged in insider trading.
Coinbase is facing its own lawsuit brought by the SEC in June. The agency said the exchange was unlawfully operating as an unregistered exchange, broker and clearing agency. The company has argued for the dismissal of the case, eliciting mixed opinions from experts on the likelihood of such an outcome.
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