Coinbase insider trading and unlisted securities.

• Three adults; a coinbase employee who knew which new coins were about to be listed on Coinbase, his brother and his friend, are all being charged with mail fraud in a SEC investigation into an insider trading.
• Some of the details which are beginning to come out include: SEC is alledging that the Coinbase employee gave information to his brother about upcoming listings, which presumably his brother would then buy and then sell at a higher price after the Coinbase listing and the normal rise in the token's price.
• This charge is alledged in the legal sense, as it is reported that the three are cooperating and are not disputing the charges.

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Unregistered Securities

• However the secondary charges the SEC is leveling against the trio is buying and selling unregistered securities.
• This currently includes ten different cryoptocurrencies, and raised the possibility of ten different trials for each of the Trio on each alledged security.
• Sources identified the cryptocurrency SEC states are securities:

According to documentation from the SEC, ... the following digital assets as unregistered securities: AMP (OTC:AMLTF) (AMP), Rally Network (RLY), DerivaDEX (DDX), XYO (XYO), Rari Governance Token (RGT), LCX (LCX), Powerledger (POWR), DFX Finance (DFX), and Kromatika (KROM).
source

• The Official SEC Charges
• This article from Bloomberg Law:
• SEC digs into unregistered securities chharges

Coinnbase was not charged so has no legal standing to defend itself

• This is huge because Coinbase and other large exchanges listed these cryptocurrency tokens, so while they are not charged in this case, they are indirectly being accused of listing and facilitating the buying and selling of unregistered securities.

• This is also huge because the SEC hasn't directly named Coinbase and other exchanges, but if this Trio loses the trial on whether they bought and sold unregistered securities, Coinbase and several other large exchanges will have lost this same legal decision, despite the fact they are not named, and despite the fact, they have no legal standing to defend themselves in this case, they will be declared guilty by the court decision.

• This very unusual legal predictament is not my analysis, as I am no lawyer, but it has been focused on by lawyers who were asked their opinions.

• This legal catch 22 makes the SEC actions seem particularly mean spirited and premeditated.

Coinbase has responded forcefully, denying the SEC charges.

Statements by Coinbases Chief Lawyer

• Paul Grewal, chief legal officer at Coinbase
• Coinbases Chief Lawyer posts statement Coinbase does list Securities

Coinbase Lawyer Quotes and sources

I’m happy to say it again and again: we are confident that our rigorous diligence process—a process the SEC has already reviewed—keeps securities off our platform, and we look forward to engaging with the SEC on the matter.

Coinbase’s chief legal officer, Paul Grewal, denied the claims Thursday in a blog post titled “Coinbase does not list securities. End of story.”

“Seven of the nine assets included in the SEC’s charges are listed on Coinbase’s platform,” Grewal said in the blog post. “None of these assets are securities.”

Coinbases CEO makes statement

• Coinbase CEO Brian Armstrong responded strongly to SEC charges

SEC may investigate and charge Coinbase

• However two sources now report the SEC is investigating Coinbase after these public statements from the CEO of Coinbase and the Coinbase Chief legal counsel.
• SEC investigates Coinbase

Lastly the CFTC disagrees with the SEC

• The Commodity Futures Trading Commission has recenty become involved in cryptocurrency because there are many legal and political authorities who feel many cryptocurrencie are actually Commodities, not Securities.
• This means those cryptocurrencies which are determined to be commodities are not under the SEC's juristiction, because they are not securities.
• The CFTC has recently made statements which have no historical precedent, as it disagrees with the SEC in public and condemns the SEC actions as I quote:

...the SEC is regulating the cryptocurrency market by enforcement, not regulations and guidelines.

Additionally...

• The CFTC has condemened the SEC actions, as over reaching into commodities where they have no juristiction.

Last words

• Hold on to your hats folks, things are about to get exciting.
• This looks like a cat fight between COinbase and the SEC, plus the CFTC and the SEC.
• When government agencies get into public tussles over juristiction it makes the government executive look weak.
• So look for strongly worded statements from the WhiteHouse or other strong actions.
• This is of course my humble opinion :)