SEC identifies nine digital crypto tokens as securities in insider trading case

The US Securities and Exchange Commission (SEC) has declared nine digital crypto tokens as securities in the insider trading case.

This statement comes at a time when, on Thursday, federal agents arrested a former Coinbase product manager and his brother on charges of an insider-trading scheme that generated $1.5 million in illegal profits.

While analysing the case, SEC, in a 38-page analysis, identified tokens AMP, RLY, DDX, XYO, RGT, LCX, POWR, DFX and KROM as securities and outlined how each token meets the definition of a security under federal law.

SEC enforcement chief, Gurbir Grewal, in a statement, said, "In this case, those realities affirm that a number of the crypto assets at issue were securities, and, as alleged, the defendants engaged in typical insider trading ahead of their listing on Coinbase. Rest assured, we’ll continue to ensure a level playing field for investors, regardless of the label placed on the securities involved."

Caroline Pham, Commissioner, Commodity Futures Trading Commission (CFTC), took to Twitter and said this is an example of "regulation of enforcement".

In the statement, she stated, "Given overriding public interest and the open questions on legal statuses of various digital assets, such as utility tokens and DAO tokens, the CTFC should use all means available to fulfill its statutory mandate to vigorously enforce law and uphold the Commodity Exchange Act."

Brian Armstrong, CEO and Co-founder, Coinbase, in a blog post, said, "We understand that the SEC has separately filed securities fraud charges related to this wrongdoing today. The DOJ did not charge securities fraud. No assets listed on our platform are securities, and the SEC charges are an unfortunate distraction from today's appropriate law enforcement action."