The US Securities and Exchange Commission (SEC) is facing a lawsuit from lawyers representing former Coinbase manager Ishan Wahi, who has been accused of insider trading.
Wahi’s lawyers are challenging the SEC’s claim that a list of nine cryptocurrencies that Wahi interacted with are, in fact, securities.
The lawyers claim that the SEC is attempting to establish authority over the crypto asset sector through the courts, rather than obtaining it from Congress.
According to the filing, the defendants claim that the tokens at issue were all sold on the secondary market and that the value of such tokens derive most of their value from market fluctuations, rather than a centralized party’s efforts.
SEC Chairman Gary Gensler maintains that the majority of cryptocurrencies pass the Howey Test, which establishes if an investment contract is a security, but has conceded that Bitcoin is a commodity rather than a security.
