US Court Ruling on Coinbase Insider Trading Case: Cryptocurrency Sales in the Secondary Market Deemed Securities Transactions

The document stated that the judgment was made in the absence of Ramani, who escaped prosecution by leaving the United States, and took the aforementioned key position in the absent judgment:
Even though Ramani conducted token transactions on the secondary market, each participant still tried to emphasize the profitability of their tokens.
It further added, “Therefore, according to the Howey test, all the encrypted assets purchased and traded by Ramani are investment contracts.”
In July 2022, the press release from the Southern District of New York Prosecutor’s Office claimed that this case was the first insider trading case involving the cryptocurrency market. Therefore, this case is often compared with the subsequent OpenSea NFT insider trading case.
In addition, cryptocurrency companies including Coinbase often argue that many cryptocurrencies are not securities, making this judgment significant for them as well.
However, due to the unclear regulations on cryptocurrency in the United States, there are discrepancies in local judges’ rulings on whether the sale of cryptocurrencies constitutes the sale of unregistered securities.
In July of this year, Judge Analisa Torres ruled in the SEC v. Ripple ($XRP) case, stating that Ripple Labs’ “programmatic sales” of coins through exchanges did not meet the Howey Test and therefore did not fall under the definition of securities.
However, the “institutional sales” they conducted did make $XRP qualify as a security (investment contract), so some of the charges in the case are still pending a final court decision.
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Furthermore, Judge Jed Rakoff in the SEC v. Terraform Labs case determined that the sales of UST, LUNA, wLUNA, and MIR are all securities.
Therefore, the SEC also hopes to cite this ruling, claiming that BUSD is no different from UST and using it to support its allegations in the case of Coinbase’s sale of unregistered securities:
Every cryptocurrency issuer may attract investors, including platforms like Coinbase, who expect the value of their assets to increase, which meets the definition of securities.
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SEC hopes to cite Terraform Labs ruling to win in Binance and Coinbase cases
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