Insider Trading Everywhere! DOJ and SEC Press Novel Insider Trading Claims
July 21, 2022
In this bylined article for The Blockchain Law Alliance, Doug Pepe discusses a recent four-count indictment brought by the DOJ and related SEC enforcement action against three individuals, including a former employee of Coinbase, for alleged insider trading of crypto assets. These are the first cases to allege “tippee” liability for insider trading in the crypto context.
In addition, while the DOJ brought the criminal case under the wire fraud and conspiracy statutes, the SEC asserted its claims under the securities laws – marking the first time the SEC has alleged insider trading in violation of securities laws in the crypto context. The SEC action directly raises the question whether the tokens at issue qualify as unregistered securities, with significant implications for whether the platforms that facilitate trading in those tokens are potentially exposed to legal liability as unregistered securities exchanges.