Federal Judge Rules in SEC’s Favor in Coinbase Insider Trading Lawsuit

• Coinbase’s Chief Legal Officer expresses skepticism over the Friday judgment on X.
• Paul criticizes the court’s reliance solely on SEC filings, undermining credibility.
• Judge Tana Lin ruled in SEC’s favor, classifying secondary token sales on Coinbase as securities.

Judge Tana Lin in the Western District Court of Washington, issued a ruling on Friday stating that secondary token sales in question are securities, despite being traded on Coinbase, a secondary market. Following the ruling, a Twitter user tagged Paul Grewal, the Chief Legal Officer (CLO) of Coinbase seeking their comments.

In response, the CLO posted a thread on Twitter, expressing skepticism towards the judgment.

The CLO pointed out that default judgments like this one occur when the defendant fails to contest the allegations. As a result, the judge is compelled to accept the SEC’s arguments without opposition.

Paul highlighted that the judge solely considered the SEC’s filings, disregarding any amicus briefs or counterarguments that could challenge the SEC’s assertions. This approach, according to the CLO, undermines the credibility and authority of using the judgments of being ‘precedent or persuasive’ in the future

The CLO also criticized the SEC’s strategy of targeting absent defendants and intermediaries while avoiding issuers in similar cases. This prevents individuals with crucial information from challenging the SEC’s claims effectively.

The court case at hand revolved around Ishan Wahi, a former employee of Coinbase. He and his brother have settled charges with the Department of Justice and the Securities and Exchange Commission (SEC).
However, the case against their associate, Sameer Ramani, has escalated as he is currently beyond the reach of US authorities. This decision strengthens the SEC’s enforcement campaign that was initiated by the previous chair Jay Clayton and continued under Gensler.