SEC Retracts Crypto Securities Label in Binance Lawsuit Update

In an amended complaint against the crypto exchange Binance and its former CEO Changpeng Zhao, the U.S. SEC clarified that it never intended to label cryptocurrencies as securities.

While expanding the Binance lawsuit to include three more tokens, the Securities and Exchange Commission retracted its “crypto asset securities” claim, a term it has previously used in several enforcement actions against digital asset operators.

Several of the SEC’s lawsuits against entities like Binance and Coinbase were based on allegations that these businesses offered unregistered crypto asset securities. The industry has long argued that such an asset class doesn’t exist. On September 12, the SEC filed documents that seemed to affirm this position.

The agency expressed regret for assigning the securities label to individual cryptocurrencies and groups of tokens. According to a footnote in the amended complaint, the SEC used the term as a shorthand reference to various aspects of crypto sales.

The SEC committed to using the “crypto asset securities” term less frequently and apologized for any confusion it may have caused. However, digital asset representatives criticized the admission as being insufficient. Echoing remarks from Coinbase CLO Paul Grewal, Ripple CLO Stuart Alderoty said the SEC’s filing highlighted the agency’s misguided approach to regulation.

The SEC finally admits that “crypto asset security” is a made-up term and to prove a “crypto asset security” is an investment contract, the SEC needs evidence of a bundle of “contracts, expectations, and understandings.”

Despite this development, the SEC continued its crypto crackdown, as evidenced in its updated Binance lawsuit. The latest court submission included Cosmos (ATOM), Axie Infinity (AXS), and Filecoin (FIL) as unregistered securities.

Shortly before the filing, the SEC also settled its case with eToro, and the firm agreed to shutter nearly all crypto trading. The agency used “crypto asset securities” in that agreement as well.

In other related updates, SEC chair Gary Gensler was being investigated over allegations that some of his hiring choices were politically motivated. Top GOP lawmakers like Patrick McHenry were part of the inquiry into the SEC boss.

For more news and updates on the evolving world of cryptocurrencies, investing, and finance, stay tuned to Global Crypto News.