SEC Lists Nine Crypto Tokens as Securities Following Coinbase Insider Trading Charges

The Securities and Exchange Commission (SEC) has listed nine cryptocurrencies that it says are securities. This was contained within a complaint arresting and charging a former Coinbase employee and two others with wire fraud. From a report: The assets were: AMP, RLY, DDX, XYO, RGT, LCX, POWR, DFX, KROM. They were each mentioned in connection with alleged insider trading. "Our message with these charges is clear: fraud is fraud is fraud, whether it occurs on the blockchain or on Wall Street," wrote the SEC in its complaint. This is one of few examples from the SEC where it has named specific cryptocurrencies as securities; it has provided little clarity over the years.

Insider Trading & money laundering = FPMIA tim

[Joe_Dragon]

Insider Trading & money laundering = FPMIA time

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[DarkRookie2]

Yeah, but for like 6-18 months. This is white collar stuff.
This isn't like the hard drug weed. That shit will get you locked up for decades.

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[nightflameauto]

Poor + weed = decades

Rich + weed = public appearances and rehab.

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[ISayWeOnlyToBePolite]

Yeah, but for like 6-18 months. This is white collar stuff.

This isn't like the hard drug weed. That shit will get you locked up for decades.

Martha Stewart did 5 months, longest I'm aware of for insider trading is Raj Rajaratnam 7.5 years. I think at least part of the problem is how first time offenders are always judged more lenient, I'm not convinced that should always apply to these types of fraud.

My favorite part from the article

[DarkRookie2]

It has submitted a petition to the SEC that it should develope rules for what it describes as "digital asset securities."

That would be a short list of 1.
1. "Digital asset securities", are securities and should be treated as such.

Re:My favorite part from the article

[splutty]

Looks like a security, smells like a security, crypto company screams very loudly it is not a security: It's a security.

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[bill_mcgonigle]

Yeah, securities have specific characteristics.

I have no idea what these symbols are but if they represent ownership shares, bankruptcy claims, confer voting rights, etc. then they are securities.

If they're not securities (like currencies) then SEC should be smacked for overreach. "Crypto" is so broad they could be all kinds of thing potentially.

SEC is not the only entity capable of prosecuting fraud, which almost nobody accepts as OK. Hopefully this isn't a power grab.

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[Xenna]

If there's a company behind it it's a security.

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[LeeLynx]

The burgeoning tulip industry is in danger, and Coinbase is just trying to protect their interest in exploiting it.

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[Briareos]

Anyone else read that as "digital asshat securities"?

Based on the amount of fraud and theft...

[nickovs]

Shouldn't crypto tokens be classified as insecurities?

Re:Based on the amount of fraud and theft...

[Applehu Akbar]

Shouldn't crypto tokens be classified as insecurities?

Laughing stocks...

At the time?

[Matt321]

Were those considered securities at the time? If those were not considered securities at the time that the alleged fraud took place, then they cannot be retroactively made securities for the sake of getting a conviction.

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[Anonymous Coward]

If those were not considered securities at the time that the alleged fraud took place, then they cannot be retroactively made securities for the sake of getting a conviction.

I thought the message was clear: fraud is fraud is fraud

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[Petersko]

They're just putting a label on it. The fraud was just as, well, fraudulent, as it was without the label.

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[ISayWeOnlyToBePolite]

Were those considered securities at the time? If those were not considered securities at the time that the alleged fraud took place, then they cannot be retroactively made securities for the sake of getting a conviction.

From the complaint linked in the article:

11. The federal securities laws define what a security is. That definition includes “investment contracts.” Section 2(a)(1) of the Securities Act of 1933, 15 U.S.C. 77b(a)(1)

and refers to SEC v. W. J. Howey Co. as precedence relevant for this case. IANAL so any insight as to how you seemingly reached another view appreciated.

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[LeeLynx]

This. You can't sell something that meets the definition of a security, just say it isn't a security, then go on your merry way until the Feds come along and correct you.

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[ISayWeOnlyToBePolite]

The IRS seems to have a different opinion. It's listed as property, like a car or computer. In fact they specifically avoid calling it anything financially related so they can tax the hell out of it.

Frankly, the tax system as usual is really stupid. I can understand taxing when converting to fiat from cryptocurrency financials. That makes sense and they get paid the proper tax amounts. However, instead they tax every single transaction, including swapping imaginary digital tokens for other imaginary digital tokens. Then they want you to pay real fiat cash money even though no actual money was involved. Were is the money suppose to come from to pay the tax? WTF

Afaik they're generally treated as collectibles, so no tax when traded like for like (think baseball cards), this however doesn't necessarily free you from having to keep track of your trades which seems to me like the common complain. In this case the SEC has identified a limited number of cryptocurrencies as "investment contracts".

Hold up now partner!

[ChitlinCookoffChamp]

I was told cryptocurrencies were an anonymous tool only used by criminals. Why do they keep getting caught using it? How does this keep happening? It's supposed to be anonymous! I guess I'm going to have to go to fiat for my crime. Goddamnit crypto, I was lied to!