SEC Tests Its Reach With Coinbase Insider Trading Case

July 25, 2022 – Media Mention

Arthur Jakoby, co-chair of Herrick's Securities Litigation and Enforcement Group, spoke to Law360 about the Securities and Exchange Commission's ("SEC") recent decision to sue a former Coinbase manager for alleged insider trading. In the article, Arthur shares his insights about the agency's recent step to broaden its jurisdiction over the cryptocurrency space. 

The article highlights that the SEC has brought numerous enforcement actions alleging that various cryptocurrency token sales were unregistered securities offerings, and these firms have put significant resources toward fighting the SEC in these litigations. "It can cost a fortune to defend against government allegations," Arthur said when asked about the recent SEC action taken against Ripple Labs. He added, "Ripple is clearly indicating that it's going to fight every single battle."

According to the article, the Coinbase case has rekindled a long-running debate about whether the SEC has provided adequate clarity to the industry about which cryptocurrency tokens are securities. Arthur argues, "The SEC is using the courts, rather than the rulemaking process, to define its jurisdiction." He added, "Instead of engaging in transparent and public rulemaking, with industry comments, the SEC has chosen to mark its territory via the federal court system."

Read the full version of the article in Law360 here. Access may require subscription.