The U.S. Securities and Exchange Commission (SEC), known for targeting crypto companies over their “crypto asset securities,” has caused confusion by saying it never intended to imply that the tokens themselves were securities.
SEC Argues That Term Crypto Asset Security Does Not Indicate These Tokens Are Securities
This surprising revelation comes amid the SEC's ongoing lawsuit against crypto exchange Binance.
The SEC explained in a footnote in its amended complaint that when it uses the term “crypto asset securities,” it is not referring to the digital assets themselves, but rather to a broader set of contracts, expectations, and agreements surrounding their sale. The agency called the term merely an “acronym.”
The SEC also defended its stance by pointing to additional text in its lawsuit against Telegram, claiming that it has always maintained this position. However, to avoid further misunderstandings, the agency said it would stop using the acronym in its lawsuit against Binance, and “regrets any confusion.”
The crypto community responded with skepticism. “I didn’t even know it was possible for manipulation to be this extreme,” Variant Fund’s Chief Legal Officer Jake Chervinsky said on X (formerly Twitter).
Coinbase’s Chief Legal Officer Paul Grewal also criticized the SEC, pointing out that the agency explicitly calls XRP a “digital asset security” on the first page of its complaint against Ripple. Ripple’s Chief Legal Officer Stuart Alderoty echoed these concerns, calling the SEC’s stance a “twisted trap full of contradictions.”
Alderoty also said: “So is the SEC finally admitting that 1/ ‘crypto asset security’ is a made-up term and 2/ in order to prove ‘crypto asset security’ the SEC needs evidence of a bundle of ‘contracts, expectations, and understandings’?”
*This is not investment advice.