Feb 18, 2023
SEC Accused of Wildly Applying Securities Laws to Crypto Transactions
The United States Securities and Exchange Commission (SEC) is currently in the spotlight for its recent accusation and charge of Do Kwon and Terraform Labs for allegedly selling a “suite of crypto asset securities.” This move has caused a stir in the crypto community, as many lawyers are questioning the manner in which the SEC is going after Terra and its founder.
Mike Selig, a web3 lawyer, shared his thoughts on Twitter. He pointed out that the SEC considers the algorithmic stablecoin TerraUSD Classic (USTC) to be a security because it can be exchanged for Luna Classic (LUNC), which is also considered a security by the SEC. Selig argued that this could mean that “nearly anything can be a security.”
Mike Wawszczak, the general counsel for Alliance DAO, suggested that SEC Chairperson Gary Gensler might be aiming for complete discretion in applying securities laws to any transactions. He also noted that Gensler had requested $2.2 billion in FY 2023, which is significantly more than San Francisco’s budget last year, which was $13 billion.
Justin Browder, a partner at the law firm Willkie Farr & Gallagher, compared the SEC’s description of USTC’s use to generate returns on another protocol to “depositing fiat in a bank.” He expressed his confusion by asking if there is another non-security currency that does not behave like that. Browder also described the SEC’s actions as “wild.”
Other members of the crypto community also shared their opinions. Dylan Daniel suggested that if everything becomes a security, the SEC will have to expand and scale itself, and he hoped that Gensler had a solid plan.
The SEC’s decision to go after Paxos for the Binance USD (BUSD) stablecoin also sparked similar reactions on Twitter. Many people were confused, as they argued that users of the stablecoin do not purchase it and expect its price to go up.
The SEC’s latest action has caused a stir in the crypto community, as it has cast a shadow of uncertainty over the web3 space. With the SEC’s increasing attention to NFTs, crypto assets, and NFT marketing, web3 agencies and NFT marketing agencies are likely to be impacted. It is important for these agencies to be aware of the SEC’s regulations and to ensure that they are compliant when selling NFTs and promoting them through Twitter NFT marketing.
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