What’s Going on With the SEC, Binance, and Coinbase?

1. It looks like altcoins are under siege as the SEC charges at Binance and Coinbase.
2. A total of 19 tokens have been classified as securities according to the SEC.
3. The implications of this classification could bring ruin to the US and global crypto industry

The SEC is on a warpath. Recently, the SEC has set its sights on Coinbase and Binance to purge 19 tokens from both exchanges. This is because Gensler is marking these 19 tokens as securities and is facing the exchanges in court via the SEC.

The SEC has named these 19 tokens as securities throughout the Binance + Coinbase filings.

This could have massive implications for these tokens, and the industry as a whole.

Some quick thoughts.👇 (1/9) pic.twitter.com/kYQTK8lvoe

— Miles Deutscher (@milesdeutscher) June 8, 2023

As seen from the tweet above, Miles Deutscher, a crypto analyst and DeFi addict educates the crypto community about the SEC’s current move. It is no secret that the SEC has been at war with crypto service providers and crypto exchanges for months. 

Most recently, the SEC has turned their fight towards Binance and Coinbase. In detail, the SEC has named 19 tokens as securities throughout the Binance and Coinbase filings. Specifically, ATOM, BNB, BUSD, and COTI on Binance.

Meanwhile, CHZ, NEAR, FLOW, ICP, VGX, DAS, and NEXO on Coinbase have been identified as securities. In addition, SOL, ADA, MATIC, FIL, SAND, MANA, ALGO, and AXS have been named securities on both platforms.

Why These Tokens?

Deutscher says that this could likely have massive implications for all 19 tokens and the entire crypto industry as a whole. To highlight, Deutscher explains what ties these tokens together. Firstly, all 19 tokens went through an initial sale and fundraising event. 

Secondly, each project made a pledge to improve its protocol via ongoing developments (business and marketing). Lastly, all 19 used social media to express their protocols’ features and advantages. He also remarks how interesting it is that ETH did not make it onto the list.

What’s the Conflict?

Next, he introduces the cause of the conflict – the Howey Test. This test has four criteria that determine an asset to be an ‘investment contract’ or security. The four criteria include an investment of money in a common enterprise with the expectation of profit and must be derived from the efforts of others.

Using this test, the SEC argues that the 19 tokens identified all meet the requirements of the Howey Test. Therefore, since all the three common factors mentioned would lead to an expectation of profit, they all classify as a security.

Now, the implications of these tokens being considered securities would mean three things. Firstly, these tokens will not be able to be traded within US exchanges. Secondly, they will likely be delisted from US exchanges. Lastly, it would create regulatory challenges which will set an alarming precedent.

Deutscher states that the Howet Test is outdated as it was founded within a limited framework in 1946. Applying this test to an entirely new and unforeseen digital asset class is challenging. Thus, he declares, the SEC should refrain from making rash decisions and take a more nuanced approach. 

He also draws light on how countries like the UAE, the UK, and Australia are taking this approach to lay a greater foundation. Hence, Deutscher states it is clearly possible to come up with a fair and enlightened new framework for crypto and urges the SEC to follow their example.

Read Also

• zkLink Announces First “Dunkirk Test” to Establish New DeFi Safety Standard
• Hinman Emails Reveal XRP Doesn’t Satisfy Howey’s Security Test
• SEC Slams Coinbase with Unregistered Operations Charges
• SEC Alleges Tokens as Securities, Coinbase Stands Firm
• Coinbase Hangs Over Fire as SEC Sharpens Attack Blades

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