Wednesday, March 29, 2023

Crypto Community Wonders Fate of BNB as SEC Declares FTT Security

  • The SEC classified FTT as security in a charge against Ellison and Wang.
  • The crypto community thinks the move is a dangerous precedent for other tokens.
  • Two years ago, the SEC filed an action against the XRP token, calling it security.

The crypto community is divided over what may become of other cryptocurrencies after a US regulator labeled an exchange token security.

In a recent complaint against Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang, the Securities and Exchange Commission (SEC) asserted that FTT was a security.

The SEC argued in its 38-page complaint to the US District Court in New York that the bankrupt FTX marketed FTT “as an investment contract and, thus, as a security.”

The crypto community is still determining the implication of the security label on other cryptocurrencies, especially the rival Binance Coin (BNB). Crypto analyst Miles Deutscher believes the move from the SEC “could set a dangerous precedent for other tokens.”

Deutscher added that if indeed FTT was a security, then many influencers, counterparties, and venture capitalists (VCs) have broken the law.

Notably, the similarities between BNB and FTT have also fueled debate over whether the SEC may designate BNB as a security. However, there are arguments that the BNB token cannot be categorized as a security because it fuels a trove of smart contracts in the DeFi ecosystem.

Mike Sherlock, an investment advisor, contended that it might not be long before Binance collapses or its CEO, Changpeng Zhao, is charged with fraud with SEC’s current movement.

Two years ago, the US SEC filed an action against Ripple Labs Inc., the issuer of the XRP token, alleging that it raised over $1.3 billion through an unregistered ongoing digital asset securities offering. The action burgeoned into a multi-year legal battle, awaiting a final pronouncement from the US Court.

  • The SEC classified FTT as security in a charge against Ellison and Wang.
  • The crypto community thinks the move is a dangerous precedent for other tokens.
  • Two years ago, the SEC filed an action against the XRP token, calling it security.

The crypto community is divided over what may become of other cryptocurrencies after a US regulator labeled an exchange token security.

In a recent complaint against Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang, the Securities and Exchange Commission (SEC) asserted that FTT was a security.

The SEC argued in its 38-page complaint to the US District Court in New York that the bankrupt FTX marketed FTT “as an investment contract and, thus, as a security.”

The crypto community is still determining the implication of the security label on other cryptocurrencies, especially the rival Binance Coin (BNB). Crypto analyst Miles Deutscher believes the move from the SEC “could set a dangerous precedent for other tokens.”

Deutscher added that if indeed FTT was a security, then many influencers, counterparties, and venture capitalists (VCs) have broken the law.

Notably, the similarities between BNB and FTT have also fueled debate over whether the SEC may designate BNB as a security. However, there are arguments that the BNB token cannot be categorized as a security because it fuels a trove of smart contracts in the DeFi ecosystem.

Mike Sherlock, an investment advisor, contended that it might not be long before Binance collapses or its CEO, Changpeng Zhao, is charged with fraud with SEC’s current movement.

Two years ago, the US SEC filed an action against Ripple Labs Inc., the issuer of the XRP token, alleging that it raised over $1.3 billion through an unregistered ongoing digital asset securities offering. The action burgeoned into a multi-year legal battle, awaiting a final pronouncement from the US Court.

 

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