In the least expected turn of events, the United States Securities and Exchange Commission (SEC) has retraced its securities assets claims in the lawsuit against Binance. The correction appeared in a footnote in a September 12 modified filing.
“As this Court noted and as the SEC reiterates, with its use of the term “crypto asset securities,” the SEC is not referring to the crypto asset itself as the security; rather, as the SEC has consistently maintained since the very first crypto asset Howey case the SEC litigated, the term is a shorthand,” the regulatory body mentioned in its recent documentation.
Per the SEC, the "crypto asset securities" statement does not imply that the crypto asset is a security. Instead, "it consists of the full set of contracts, expectations, and understandings centered on the sales and distribution of the crypto asset.” Additionally, the SEC stated, “Nevertheless, to avoid any confusion, the PAC no longer uses the shorthand term, and the SEC regrets any confusion it may have invited in this regard.”
Binance and Other Implicated Exchanges Remain Under the SEC’s Rather
Considering the regulatory body’s claim modification, one would expect that the case involving the SEC and Binance should aim toward resolution. However, the reverse seems to be the case. The SEC has added new crypto assets to the list of unregistered cryptocurrencies trading on Binance as unregistered assets.
For context, the initial lawsuit in 2023 only captured ten crypto assets, including Cardano (ADA), Solana (SOL), Polygon (MATIC), etc. However, the most recent amendment now involves Axie Infinity (AXS), Filecoin (FIL), and Cosmos Hub (ATOM). Therefore, it underscores the SEC's unyielding stance, which invariably implies that the lawsuit might get more protracted.
Industry Experts Fires Back at the SEC
As anticipated, the SEC-amended regulatory action did not go well with top crypto chiefs, particularly legal experts. Most have taken to their official X handle to berate the regulatory body, calling out its inconsistencies.
Paul Grewal, the Chief Legal Officer (CLO) at Coinbase, was among the first few to call out the SEC's inconsistencies. According to him, the SEC has only admitted to misleading the court and the general public with misguided regulations.
"The SEC regrets any confusion it may have invited" by falsely and repeatedly stating that tokens themselves are securities. This is the remarkable representation in Footnote 6 of @SECGov's Amended Complaint against Binance. I hope @s_alderoty is getting some good sleep tonight.… pic.twitter.com/PpbprvkGxh
— paulgrewal.eth (@iampaulgrewal) September 13, 2024
Similarly, Stuart Alderoty, the CLO at Ripple Labs, Inc., ridiculed the SEC by sharing a new logo that does not depict the regulatory body’s original entity. In addition, he noted that the crypto assets securities term has been a made-up phrase since the SEC began using such in its lawsuit claims.
So 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"?
— Stuart Alderoty (@s_alderoty) September 13, 2024
Think it's time for @SECgov to admit it has… https://t.co/iJIYTnNvxs pic.twitter.com/E58Pft7irc
