Blockchain Association files amicus brief in Wahi case, says SEC exceeded authority

The Blockchain Association filed an amicus little Feb. 13 successful the United States Securities and Exchange Commission (SEC) lawsuit against erstwhile Coinbase Global merchandise manager Ishan Wahi and his associates. The advocacy radical expressed its enactment for the defendants’ statement for dismissal, wherever they claimed the SEC had exceeded its authorization successful the case. The lawsuit alleging unregistered securities income of 9 tokens is being heard successful the U.S. District Court of Western Washington.

Calling the lawsuit “the latest salvo successful the SEC’s evident ongoing strategy of regularisation by enforcement successful the integer assets space,” the amicus curiae, oregon “friend of the court,” little noted that the SEC declared 9 tokens to beryllium securities, with nary anterior findings. The little stated:

“The SEC conflates the tokens themselves, which are, aft all, simply software, with immoderate alleged concern declaration pursuant to which those tokens were allegedly sold.”

The little does not sermon the defendants’ “major questions” argument, but lone reminds the tribunal of the 2022 Supreme Court lawsuit of West Virginia v. the Environmental Protection Agency that recovered that the “major questions” doctrine applies erstwhile national agencies asseverate “highly consequential powerfulness beyond what Congress could reasonably beryllium understood to person granted.”

Related: SEC listing 9 tokens arsenic securities successful insider trading lawsuit ‘could person wide implications’ — CFTC

The little highlighted 3 ways successful which the lawsuit could harm the blockchain manufacture and the broader public. First, the little stated, token creators for those peculiar tokens, holders and users “are not defendants successful this action, and person nary meaningful mode to antagonistic the SEC’s pronouncements.”

Today we filed an amicus little successful SEC v. Wahi. While the SEC’s strategy of advancing its integer plus regulatory docket done enforcement actions is well-documented, this lawsuit expands that effort by attempting to punish absent 3rd parties.https://t.co/erHQvzucZZ https://t.co/jKHAI0EguF pic.twitter.com/AnBD75eSsJ

— Blockchain Association (@BlockchainAssn) February 14, 2023

The lawsuit is apt to beryllium settled alternatively than being adjudicated connected its merits, the little noted, successful enactment with humanities trends. Thus the SEC “maximized its chances of being capable to allege immoderate it wants, with a minimal hazard of being held to relationship for it.”

Second, the SEC’s lawsuit whitethorn origin exchanges to reconsider listing the tokens astatine issue, the little stated, and it whitethorn person “a chilling effect” connected the blockchain industry. The little stated:

“Merely by proclaiming that a token is simply a security, the SEC gives definite tokens a “scarlet letter,” impairing their value, hampering immoderate secondary marketplace trading of the token, and interfering with technological development.”

Finally, the little claimed that marketplace participants are incapable to find what is oregon is not a security, and “The SEC has shown small willingness to reply those questions.”

Ishan Wahi and his member Nikhil pleaded blameworthy the transgression case brought against them for insider trading by the Justice Department successful the Southern District of New York. Their codefendant Sameer Ramani remains astatine large.

The Blockchain Association is simply a nonprofit advocacy radical with astir 100 members that promotes “a pro-innovation argumentation situation for the integer plus economy.”