United States SEC Admits Several Cryptocurrencies Are Not Securities

In the ongoing legal battle between the U.S. SEC and Binance, the SEC has filed a motion to revise its original complaint. This follows a recent district court decision that rejected an attempt by Kraken to dismiss similar charges.

However, many crypto businesses are hoping that a new US Supreme Court doctrine will set a legal precedent that could theoretically force the SEC to step aside, however federal regulators remain skeptical. In any case, most are hopeful that Donald Trump will win the upcoming U.S. Presidential Election, as he has promised to fire SEC Chair Gary Gensler if he does.

SEC Acknowledges Critical Error

The new request by the SEC to amend its complaint against Binance, Binance.US, and co-founder Changpeng Zhao reveals a significant shift in its position. The updated filing acknowledges that some tokens, such as Solana (SOL), Cardano (ADA), and Polygon (MATIC), should not be classified as securities on their own.

This change comes after a court decision in the Kraken case challenged the broad definitions of what constitutes a security which was previously provided by the regulatory agency. The amended complaint aims to correct earlier misconceptions and align with the findings. The revised documents also include a redlined version showing the specific changes and additionally feature the court order relating to the Kraken case to provide context for the updated stance.

Experts Respond

Paul Grewal, Chief Legal Officer at Coinbase, quickly responded to the new filing on X, pointing out a key detail, which is that the SEC has acknowledged potential confusion in labeling certain tokens as securities.

Ripple Chief Legal Officer, Stuart Alderoty, also commented on the change, noting that while Ethereum (ETH) seems to have avoided scrutiny by the SEC, numerous other tokens still face regulatory challenges. Despite this, the SEC continues to argue that these assets are sold as investment contracts and plans to pursue regulatory action against them.

As for Binance, the exchange is expected to respond to the request by October 11th, 2024. The updated complaint and the evolving position of the SEC highlight ongoing efforts by the regulator to assert control over the crypto industry.