In an amended complaint against crypto exchange Binance and former CEO Changpeng Zhao, the U.S. SEC stated it never intended to label cryptocurrencies as securities.
While expanding the Binance lawsuit to include three more tokens, the Securities and Exchange Commission walked back its “crypto asset securities” claim, which it has used in multiple enforcement actions against digital asset operators.
Several of the SEC’s lawsuits against entities like Binance and Coinbase were based on allegations that these businesses offered unregistered crypto asset securities. The industry has long contended that such an asset class doesn’t exist. On Sept. 12, the SEC filed documents seemingly affirming this position.
The agency expressed regret for assigning the securities label to individual cryptocurrencies and groups of tokens. According to a footnote in the amended complaint, the SEC used the term as a shorthand reference to various aspects of crypto sales.
The SEC committed to using the “crypto asset securities” term less frequently and apologized for any confusion it may have caused. However, digital asset representatives criticized the admission as being too little, too late. Echoing remarks from Coinbase CLO Paul Grewal, Ripple CLO Stuart Alderoty said the SEC’s filing underscored the agency’s misguided approach to regulation.
— Stuart Alderoty (@s_alderoty) September 13, 2024So the SEC finally admits that 1/ "crypto asset security" is a made up term and 2/ to prove a "crypto asset security" is an investment contract, the SEC needs evidence of a bundle of "contracts, expectations, and understandings"?
Think it's time for @SECgov to admit it has… https://t.co/iJIYTnNvxs pic.twitter.com/E58Pft7irc
Despite the development, the SEC continued its crypto crackdown, as evidenced in its updated Binance lawsuit. The latest court submission included Cosmos (ATOM), Axie Infinity (AXS), and Filecoin (FIL) as unregistered securities.
Shortly before the filing, the SEC also settled its case with eToro, and the firm agreed to shutter nearly all crypto trading. The agency used “crypto asset securities” in that agreement.
In other related updates, SEC chair Gary Gensler was being investigated over allegations that some of his hiring choices were politically motivated. Top GOP lawmakers like Patrick McHenry were part of the inquiry into the tensioned SEC boss.