The first-ever crypto insider trading case may have larger implications for cryptocurrency regulation than previously expected.
. According to the latter’s lawyers, the cryptocurrencies with which the brothers traded – including AMP, RLY, POWR, and LCX – aren’t actually securities. Thus, no securities laws could have been violated to begin with.“The SEC seeks to distort the federal securities laws beyond all recognition, and win for itself regulatory domain over an entirely new industry,” read the filing. “That gambit is an abuse of power. Federal law clearly forecloses it. And this Court should reject it.”.
The defendants claim that the tokens at issue were all sold on the secondary market – thus, buyers never ‘invested’ into any specific enterprise when purchasing them. Furthermore, the value of such tokens derive most of their value from fluctuations within the market, rather than a centralized party’s managerial efforts.To this day, SEC chairman Gary Gensler maintains that the vast majority of cryptos pass the Howey Test, and can therefore be classified as securities.
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