Feb 18, 2023
SEC Accused of Wildly Applying Securities Laws to Crypto Assets
The United States Securities and Exchange Commission (SEC) has recently taken action against Terraform Labs and its founder, Do Kwon, for allegedly selling a “suite of crypto asset securities.” The news has sparked various reactions from the crypto community, with many lawyers questioning the SEC’s approach.
Mike Selig, a web3 lawyer, posted his thoughts on the matter on Twitter. He explained that the SEC has characterized the algorithmic stablecoin TerraUSD Classic (USTC) as a security because it could be exchanged for Terra (LUNA), now known as Luna Classic (LUNC), which is also a security according to the SEC. Selig argued that this theory implies that “nearly anything can be a security.”
Mike Wawszczak, the general counsel for Alliance DAO, also commented on the topic. He believes that SEC Chairperson Gary Gensler may want “complete discretion” in applying securities laws to any transactions. Wawszczak also noted that Gensler requested $2.2 billion in FY 2023 for this job.
Justin Browder, a partner at the law firm Willkie Farr & Gallagher, likened the SEC’s description of USTC’s use to generate returns on another protocol to “depositing fiat in a bank.” He questioned whether there is another non-security currency that does not behave like that. Browder described the SEC’s actions as “wild.”
Other members of the crypto community also added to the conversation. Dylan Daniel believes that if everything becomes a security, the SEC will have to expand and scale itself. He hopes that Gensler has a solid plan.
The SEC’s decision to go after Paxos and its Binance USD (BUSD) stablecoin has also caused confusion among the community, with many arguing that users of the stablecoin do not purchase it and expect its price to go up.
The SEC’s actions have highlighted the importance of NFT marketing and NFT promotion, as well as the need for an experienced NFT marketing agency and web3 agency to help crypto projects and businesses navigate the complex web3 space. Twitter NFT marketing is a great way to promote NFTs and get the attention of potential buyers. Selling NFTs can be a lucrative endeavor, but it is important to understand the legal implications of doing so in order to avoid running afoul of the SEC.
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