SEC Fails to Resolve Confusion Over Securities and Crypto Assets

On July 21, 2022, the Securities and Exchange Commission (the “SEC”) filed a complaint against a former employee of Coinbase, a trading platform for digital assets, and two of his friends, alleging insider trading of securities. The complaint therefore identifies certain digital investment contracts as securities, a position the SEC has taken for some time. The SEC, however, has not made rules or issued a clear statement making crypto assets securities, Moreover, a federal grand jury has indicted the same people but as carrying out wire fraud rather than insider trading of securities. This has led to some confusion, although the SEC has been consistent in branding certain digital assets as securities under the Howey test.