A recent guilty plea in U.S. v. Wahi in the U.S. District Court for the Southern District of New York, a crypto insider trading case, sets up an interesting situation where the defendants — who have already pled guilty to wire fraud — are challenging the SEC’s parallel civil charges. Among other things, they are arguing that crypto tokens traded on a secondary market are not securities, regardless of whether they may have been considered “investment contracts” at issuance.
For the massive secondary crypto market ecosystem, this case has the potential to broadly extend SEC jurisdiction or upend the space, depending on one’s point of view.