Yesterday was a big day for the crypto industry. A former Coinbase product manager, along with his brother and a friend, was arrested and charged by the United States Department of Justice (DOJ) with running an insider cryptocurrency trade.
At the same time, the US Securities and Exchange Commission (SEC) archived a separate document on the case, in which some of the assets traded by the group are classified as cryptocurrency securities, a classification that has raised eyebrows.
“I find it odd that the SEC would charge three individuals for violating securities laws, arguing that at least nine of the 25 digital assets they bought and sold as part of the alleged scheme qualify as securities, but not the exchange. pursuing that listed these digital assets,” Hailey Lennon, a partner at law firm Anderson Kill, told gotechbusiness.com.
“The truth is, if the Feds wanted this industry to be regulated, it would.” Michael Fasanello, Chief Compliance Officer, LVL
The classification of some crypto assets as securities could have major implications for the digital asset industry, which has largely benefited from years of little to no regulatory oversight.
While crypto is somewhat free of regulation due to its de novo products, it sees problems similar to what other financial markets have seen.
Insider trading has been around long before cryptocurrency, Michael Fasanello, chief compliance officer at LVL, told gotechbusiness.com. “The crime has stayed the same, it’s just the modality that’s different.”
While the industry is concerned about what lies ahead, lawyers and others in the crypto space shared their thoughts with gotechbusiness.com about what the classification of some crypto products as securities could mean for the industry.