Crypto Secondary Market Sales Deemed Securities Transactions

A federal judge has ruled that secondary market sales of crypto assets constitute securities transactions. This decision stems from an insider trading case involving Coinbase, where former product manager Ishan Wahi allegedly leaked confidential information to his brother and a friend.


In July 2022, the SEC accused Ishan Wahi of providing his brother, Nikhil Wahi, and friend, Sameer Raman, with advance knowledge of which crypto assets Coinbase would support. The trio allegedly profited from this information by purchasing and selling these assets before they were listed on Coinbase.

Court Ruling

In a recent court filing, the judge determined that the transactions made by the Wahi brothers and Raman qualified as investment contracts under the Howey test. This means that the crypto assets were considered securities because they met the following criteria:

  • Investment of money
  • Expectation of profits
  • Common enterprise
  • Reliance on the efforts of others


The judge’s ruling has significant implications for the crypto industry. It suggests that secondary market sales of crypto assets may be subject to securities laws, which could increase regulatory oversight and enforcement actions.

Defendant’s Absence

Raman, who failed to respond to court summonses, has reportedly fled the country. The judge issued a default judgment against him, finding that he traded on material nonpublic information and engaged in misconduct related to the purchase and sale of securities.