The US Securities and Exchange Commission (SEC) has launched lawsuits against crypto giants Binance and Coinbase. So the charges against these major exchanges have far-reaching implications, including serious regulatory violations. On the other hand, the new wave of regulatory scrutiny marks a significant turn. It has also inflamed discussions regarding the classification of certain altcoin projects as securities.
SEC sues Binance and Coinbase
As you follow on Kriptokoin.com, the leading player in the global cryptocurrency exchange market, Binance and its founder, Changpeng Zhao, are facing a series of regulatory breaches as pointed out by the SEC. The main accusations against Binance surround the alleged misappropriation of billions of dollars belonging to users. Also, the SEC accuses Binance of undermining regulation. At the same time, Coinbase is grappling with a lawsuit from the SEC alleging that the company functions as an unregistered broker and exchange. The regulator argues that Coinbase’s flagship services violate securities regulations.
However, the double lawsuit against Binance and Coinbase has sparked extensive controversy in the cryptocurrency market. Speculation abounds as to whether the regulator intends to leave these cryptocurrency exchanges to oblivion, opening the floodgates for Wall Street dominance. The future of these crypto exchanges remains uncertain. On the other hand, there is a growing concern about compliance in the crypto market.
Howey Test for altcoin projects in crypto
Meanwhile, the Howey Test is at the center of the SEC’s legal action. This test is a somewhat outdated legal framework designed in 1946. It is named after the SEC and WJ Howey Co. He takes it from the landmark case between the two. This test determines whether an investment qualifies as a “security”. In addition, it consists of four basic criteria. It mainly explores investing money in a joint venture in anticipation of a profit from the efforts of others.
How Does the Howey Test Work?The SEC claims that 19 tokens traded on Binance and Coinbase meet the Howey Test criteria. This is due to factors such as initial sales and fundraising events, ongoing development commitments, and the use of social media to articulate the features and benefits of protocols. However, critics argue that the application of this test to digital assets, which originated in a period long before the emergence of cryptocurrencies, is insufficient. They also note that it will lead to overly restrictive regulatory consequences.
Altcoins called securities in SEC lawsuits
Meanwhile, the SEC has designated 19 altcoin projects as securities in lawsuits against Binance and Coinbase. In the SEC lawsuit filed against Binance, the regulator labeled these tokens as securities:
- Cosmos (ATOM)
- Binance Coin (BNB)
- Binance USD (BUSD)
- COTI (COTI)
Meanwhile, in the SEC lawsuit against Coinbase, these altcoins were named securities:
- Chiliz (CHZ)
- Near Protocol (NEAR)
- Flow (FLOW)
- Internet Computer (ICP)
- Voyager Token (VGX)
- Dash (DASH)
- Nexo (NEXO)
Finally, these tokens traded on both platforms, Binance and Coinbase, are also tagged as securities:
- Left (LEFT)
- Cardano (ADA)
- Polygon (MATIC)
- Filecoin (FIL)
- Sandbox
- Decentraland (MANA)
- Algorand (ALGO)
- Axie Infinity (AXS)
The biggest exception on these lists is Ethereum (ETH), which has been specifically excluded. If these tokens are eventually classified as securities, they will likely be removed from US exchanges. In addition, their trade will be severely restricted. Such a prospect could set a daunting precedent for the crypto industry, creating significant regulatory challenges, especially for developers and token holders.
A full list of altcoins the SEC calls ‘securities’
In addition to the charges against Binance and Coinbase, the SEC’s list of alleged securities covers a total of 67 different cryptocurrencies. Each token categorized as a security falls under certain regulations and requirements, accounting for $100 billion of the crypto market, or roughly 10% of the total market capitalization.
Major altcoin projects declared securities by the SEC
- Ripple (XRP)
- Telegram’s Gram (TON)
- LBRY Credits (LBC)
- OmiseGo (OMG)
- DASH (LINE)
- Algorand (ALGO)
- Naga (NGC)
- Monolith (TKN)
- IHT Real Estate (IHT)
- Power Ledger (POWR)
- Chromatica (CHROM)
- DFX Finance (DFX)
- Amp (AMP)
- Rally
- Rari Governance Token (RGT)
- DerivaDAO (DDX)
- XYO Network (XYO)
- Liechtenstein Cryptoasset Exchange (LCX)
- KIN (KIN)
- Salt Lending
- Beaxy Token (BXY)
- DragonChain (DRGN)
- Tron (TRX)
- BitTorrent (BTT)
- Terra USD (UST)
- Terra Luna
- Mirror Protocol (MIR)
- Mango (MNGO)
- Ducat (DUCAT)
- Locke (LOCKE)
- Ethereum Max (EMAX)
- Hydro (HYDRO)
- BitConnect (BCC)
- Meta 1 Coin (META1)
- Filecoin (FIL)
- Binance Coin (BNB)
- Binance USD (BUSD)
- Left (LEFT)
- Cardano (ADA)
- Polygon (MATIC)
- Cosmos (ATOM)
- Sandbox
- Decentraland (MANA)
- Axie Infinity (AXS)
- COTI (COTI)
- Paragon (PRG)
- AirToken (AIR)
- Chiliz (CHZ)
- Flow (FLOW)
- Internet Computer (ICP)
- Near Protocol (NEAR)
- Voyager Token (VGX)
- Nexo (NEXO)
- Mirrored Apple Inc. (mAAPL)
- Mirrored Amazon.com, Inc. (mAMZN)
- Mirrored Alibaba Group Holding Limited (mBABA)
- Mirrored Alphabet Inc. (mGOOGL)
- Mirrored Microsoft Corporation (mMSFT)
- Mirrored Netflix, Inc. (mNFLX)
- Mirrored Tesla, Inc. (mTSLA)
- Mirrored Twitter Inc. (mTWTR)
- Mirrored iShares Gold Trust (mIAU)
- Mirrored Invesco QQQ Trust (mQQQ)
- Mirrored iShares Silver Trust (mSLV)
- Mirrored United States Oil Fund, LP (mUSO),
- Mirrored ProShares VIX Short Term ETF (mVIXY)
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