Solana might have dodged a bullet in the SEC’s Binance lawsuit, but the crypto’s security status remains a ticking time bomb.
Despite withdrawing its request for a court ruling on Solana’s security status in the Binance lawsuit, the U.S. Securities and Exchange Commission (SEC) has not definitively cleared Solana of being classified as a security.
Jake Chervinsky, a legal expert in the crypto industry, cautions that the SEC’s recent action does not imply a change in its stance on Solana.
Chervinsky’s post discusses the US SEC’s latest move to amend its complaint regarding “Third Party Crypto Asset Securities,” effectively telling the court it no longer seeks to determine whether the tokens listed in the lawsuit are securities.
Although Chervinsky didn’t elaborate on the “litigation tactic,” he noted that the SEC still classifies the same tokens as securities in other crypto exchange lawsuits, including its case against Coinbase.
In separate posts, Miles Jennings, general counsel and head of decentralization at a16z Crypto, and Justin Slaughter, policy director at Paradigm, shared similar views.
Slaughter argued that many are overinterpreting the filing, and it doesn’t imply the SEC has decided that Solana and other tokens are not securities.
Jennings pointed out that Judge Amy Berman Jackson set a high bar for establishing the Howey test in the Binance case, making it not worth the SEC’s time and effort to prove these tokens are securities.
In contrast, Judge Katherine Polk Failla in the Coinbase lawsuit seems more inclined to agree with the SEC’s position, thus making it unnecessary to repeat the request made in the Binance lawsuit.
Jennings remains skeptical about the SEC’s ability to establish a strong connection between token sales on secondary markets and the managerial efforts of token issuers. He speculated on the SEC’s political motives based on his insider knowledge of their behavior.
In its suit against Binance, the SEC claimed several tokens, including Solana (SOL), BNB (BNB), Cardano (ADA), Polygon (MATIC), The Sandbox (SAND), Decentraland (MANA), and Axie Infinity (AXS), were securities.
The SEC previously asserted that at least 68 tokens are securities, impacting over $100 billion worth of cryptocurrencies in the market.
