How Recent Crypto Prosecutions May Crack The U.S. Code
February 7, 2024 | The Review of Securities and Commodities Regulation
Two recent prosecutions in the Southern District of New York have been called the first cryptocurrency insider trading cases, but neither case involved traditional securities fraud charges. Instead, both the OpenSea and Coinbase cases charged insider trading behavior as wire fraud, alleging that by trading in certain crypto assets, the defendants had misappropriated confidential business information. This theory of fraud, endorsed in Carpenter v. United States, 484 U.S. 19 (1987), let the government avoid the complexities of Title 15 insider trading law. Yet the Second Circuit has defined “confidential business information” in a variety of ways. In a new article in The Review of Securities and Commodities Regulation, Morvillo Abramowitz attorneys Brian A. Jacobs, Thomas A. McKay, and A. Dennis Dillon review how those cases and their application in the OpenSea prosecution shows how Carpenter-based theories may face legal challenges comparable to those that prosecutors sought to avoid. No matter how those challenges ultimately are resolved, prosecutors and practitioners may be in for yet another period of instability in insider trading law.
How Recent Crypto Prosecutions May Crack The U.S. Code (pdf | 507.30 KB)