The Chamber of Digital Commerce Accuses SEC of Going Beyond its Jurisdiction

The United States Securities and Exchange Commission (SEC) is yet again being called out for going beyond its jurisdiction to forcefully enact laws without going through the right chambers. This time, it is regarding the insider trading case against former Coinbase employees.

According to the amicus brief filing made on February 22, the U.S-based Chamber of Digital Commerce accused the SEC of overreaching, arguing that its case against an ex-Coinbase employee for insider trading should be dismissed. 

While citing a previous Supreme Court ruling in the LBRY vs SEC case that secondary market transactions do not qualify as securities transactions, it said the SEC with its fraud claims is essentially asking the court to uphold that secondary market trade constitutes securities transactions. 

This it notes will create a chaotic regulatory environment that will harm the investors it’s supposed to protect. 

Markedly, Perianne Boring, the founder, and CEO of the advocacy group describes the SEC’s actions as an attempt to expand its jurisdiction, adding that this will threaten the health of the digital asset market in the US.

SEC Refuses Approval for BTC ETF

Interestingly, this isn’t the first time the advocacy group has called out the regulator.

Back in September 2022, the group called out the SEC for refusing to approve a spot-based Bitcoin Exchange Traded Fund (ETF). It tagged the SEC’s refusal as unjustifiable adding that the regulator’s actions weren’t from a position of concern for regulations of the BTC ETF but for its power of autonomy over Bitcoin and providers of digital asset services.

For instance, several BTC ETF applicants have had to face several regulatory hurdles and are still denied their requests.

Recall that in July last year, the US SEC and Attorney’s Office for the Southern District of New York charged the former product manager at Coinbase, Ishan Wahi, and two others with conspiracy to commit wire fraud based on insider trading offenses. This came after the Department of Justice (DoJ) alleged that nine of the 25 digital tokens used in insider trading were digital assets securities.

However, Coinbase denied the accusation via an article dubbed “Coinbase does not list securities”. 

Likewise, the Commodity Futures Trading Commission (CFTC) commissioner, Caroline Pham said that the SEC’s accusation is a typical example of “regulation by enforcement”.