- SEC Seeks to Amend Binance Lawsuit
- Affected platforms include Solana, Cardano, and Polygon.
- There may be several reasons why the SEC would take this action.
The U.S. Securities and Exchange Commission (SEC) currently has the most power over crypto assets. In particular, the agency often takes legal action to enforce its views, as seen in the recent lawsuit against Binance. Specifically, the lawsuit labeled 10 crypto assets, including Solana and Cardano, as unregistered securities, which could set a detrimental legal precedent for these altcoins.
Most recently, legal considerations have prompted the SEC to re-evaluate this definition. The agency asked the court to amend the section in the lawsuit that referred to altcoins. The agency now wants to avoid setting a legal precedent on whether altcoins are securities or not.
SEC Changes Altcoin Strategy Amid Binance Lawsuit
The latest developments in the Binance lawsuit could have significant implications for many of the largest altcoins. On Thursday, July 30, the SEC filed a document revealing plans to shift its legal strategy regarding altcoins in the lawsuit. The agency proposed amending sections for 10 altcoins, including Solana, Cardano, and Polygon, to claim that these tokens are unregistered securities.
In the lawsuit, the exchange accused Binance of offering users unregistered securities. The original lawsuit specifically named 10 tokens: SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI. If the SEC’s amendment passes, the court will not have to decide whether or not they are unregistered securities, thus eliminating the need to set a legal precedent.
At the time, the inclusion of these altcoins raised concerns among holders due to the high regulatory risk. If the SEC designated the major altcoins as unregistered securities, exchanges would not be able to list these tokens for U.S. customers. Given that most users still trade tokens on centralized exchanges, this would have a significant impact on the price.
Why the SEC Is Changing Its Strategy
The SEC’s first broad application of securities laws to various cryptocurrencies has faced significant legal challenges and criticism from the crypto industry and legal experts, highlighting the difficulties in applying existing securities law frameworks to decentralized digital assets.
The SEC’s original case in the Binance lawsuit could set a legal precedent on whether altcoins like SOL and ADA can be considered securities. The SEC is likely trying to avoid setting a legal precedent in this particular case by amending the section on altcoins.
As crypto industry insiders have pointed out, this does not mean the SEC is changing its stance on altcoins. Rather, the SEC may be waiting for a clearer case on legal precedent. One possible case highlighted by 0xgaut is the case against Coinbase.
On the other side
- Many in the crypto community saw this filing as a sign that the SEC is changing its stance on altcoins, but the filing itself is not enough to support this conclusion.
- Current SEC Chairman Gary Gensler He has been consistent in his view that most crypto assets are securities, with Bitcoin and a few other coins being the only exceptions.
Why this matters
The Binance lawsuit could set a precedent for whether most cryptocurrencies can be traded on centralized exchanges in the U.S. This precedent would have significant implications for the market for these tokens.
Learn more about the SEC Chairman’s stance on altcoins:
Gary Gensler: Is the SEC Chairman Crypto’s Biggest Threat?
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