The new updates in the SEC’s lawsuit against Binance show that the agency isn’t easing up on its stance regarding Solana and other cryptocurrencies.
In fact, it appears the SEC is doubling down on its claims that selling Solana is an illegal, unregistered security offering.
The greatest show of incompetency?
After some chatter this summer suggesting that the U.S. SEC might back off from targeting alts like Solana, the regulator has made it clear that it plans to continue its pursuit.
In an amended complaint filed this week in the ongoing case against Binance, the SEC removed some controversial, aka senseless terms describing tokens as crypto asset securities.
But don’t get too excited, they also reinforced their argument that crypto exchanges broke the law by allowing customers to buy and sell SOL.
The SEC’s lawyers pointed out that the Solana Foundation promoted trading on U.S.-based exchanges as a way to boost SOL’s value and its overall ecosystem.
They argued that the information shared by Solana Labs and the Solana Foundation led SOL holders—especially those who bought SOL on Binance—to see it as an investment.
This created a reasonable expectation of profit based on Solana Labs’ efforts to grow the protocol, which would, in turn, increase demand for and value of SOL.
Investment, profit
According to securities law, assets are considered securities if they generate passive profits for investors through the active efforts of others.
Back in late July, there were hints that the SEC might amend its case against Binance to drop certain language about third-party crypto assets, including Solana, Cardano, and Polygon. Some crypto legal experts celebrated this as a sign that the SEC was retreating.
Regulator or lawmaker?
But other experts warned against getting too hopeful, suggesting that this was just a minor clerical change with little impact on the SEC’s overall strategy.
It seems those cautious voices were right, or at least partly. The SEC hasn’t labeled crypto tokens themselves as securities but has firmly stated that Solana, Cardano, Polygon, and seven other tokens were offered and sold as securities.
This means that Binance allegedly broke the law by allowing trades of these assets.
This position aligns with accusations made by the SEC last week when it sued Cumberland, a Chicago-based crypto trading firm.
In that case, the SEC claimed Cumberland violated securities laws by facilitating trades involving Solana and Polygon among other tokens.
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