The U.S. Securities and Exchange Commission (SEC) has amended its complaint against cryptocurrency exchange Binance, removing the phrase “crypto-asset securities.” “We apologize for any confusion this word may have caused,” agency officials said in a court filing released on September 12. There, it also announced that will use more cautious language in the future. In itself, the SEC modified the previous phrase in which it had stated: «The defendants illegally solicited U.S. investors to buy, sell and exchange virtual asset securities on unregistered trading platforms.»
Now the expression reads as follows: “The defendant illegally solicited US investors to buy, sell and exchange virtual assets that were offered and sold as securities on an unregistered trading platform.” With this, the US agency makes it clear that when it used the term “virtual asset value” it did not imply that these, in themselves, were classified as securities. In this regard, it added that a token will be classified as a security when it is determined according to the “understanding surrounding its sale and distribution.” The agency clarified that although it had to present the amendment months in advance, even with the previous definition, cryptocurrencies are offered and sold on Binance as investment contracts. Making it clear, with this, that the legal actions are not against their issuers or companies. As reported by BitcoinDynamic, the lawsuit that the SEC filed against Binance in June of last year warned that the agency considered that a dozen cryptocurrencies were worthy of entering the regulatory spectrum as securities.
At the time, the SEC accused Binance of trading BNB, BUSD, Solana's SOL, Cardano's ADA, Polygon's MATIC, Filecoin's FIL, Cosmos' ATOM, Sandbox's SAND, Decentraland's MANA, Algorand's ALGO, Axie Infinity's AXS, and Coti's COTI tokens.
Cryptoasset value – a made-up term?
The SEC sued the exchanges Coinbase and Kraken under the same terms, although it is unclear whether amendments have been filed for those cases as well. Another similar case occurred with the Ripple company, and in fact, the legal director of the XRP token issuer, Stuart Alderroti, criticized the actions of the regulatory agency.
“In other words, the SEC acknowledged that virtual currency securities is a made-up term and that to prove that virtual currency securities are securities based on investment contracts, evidence of a contract, expectation, and understanding is required. I think it’s time for the SEC to admit that it has complex regulations riddled with contradictions.”
Stuart Alderroti, Ripple's Chief Legal Officer.
For Paul Grewal, Coinbase's chief legal officer, the SEC's legal amendment is another victory for the industry. Source: X/iampaulgrewal. The SEC has received multiple criticisms from industry players, including Coinbase, which has called out the agency for refusing to outline its interpretation of how virtual assets should be regulated under securities law. Coinbase has noted in the past that in order to properly classify crypto assets as securities, the agency must do its best to draft rules. “This is the only way for the SEC to draw clear lines that identify them, provide fair notices, and create a workable regulatory framework that makes it possible to comply with the securities laws.” Meanwhile, for these and other reasons, calls for SEC Chairman Gary Gensler to be replaced are rife, including from some members of the US Democratic Party. Gensler has repeatedly maintained that most cryptocurrencies are securities.