The Department of Justice and Securities Exchange Commission have brought two separate insider-trading lawsuits against a former manager who worked at Coinbase. Yahoo Finance Senior Reporter David Hollerith spoke with UCLA Professor of Law Andrew Verstein on July 22, 2022.
DAVID HOLLERITH: There are two different lawsuits that have been filed, one from the DOJ and one from the SEC. Could you sort of just give us a little context about the difference between the two charges being filed?
ANDREW VERSTEIN: Both are insider trading cases, but American law doesn't have one statute called the insider trading statute. In fact, you can prosecute insider trading lots of different ways. The SEC's only way to prosecute insider trading requires the SEC to show that it was a security that is the thing that was traded.
And so the SEC's case has a little bit more uncertainty over it because Coinbase, of course, asserts that none of the altcoins count as a security. And so the insider trading of those altcoins wouldn't count as something the SEC can prosecute. So there's some uncertainty there.
And the SEC has itself at times acknowledged that some coins don't count as securities, Bitcoin and Ethereum most importantly.