Feb 18, 2023
SEC Accused of Wildly Applying Securities Laws to Crypto Transactions
The United States Securities and Exchange Commission (SEC) has recently come under fire for their decision to charge Terraform Labs and its founder, Do Kwon, for allegedly selling a “suite of crypto asset securities”. The crypto community has been vocal in their criticism of the SEC’s decision, with many questioning the manner in which the agency is going after Terra and its founder.
Web3 lawyer Mike Selig took to Twitter to voice his opinion on the matter. According to Selig, the SEC has classified the algorithmic stablecoin TerraUSD Classic (USTC) as a security due to its ability to be exchanged for Terra (LUNA), now known as Luna Classic (LUNC), which is also a security according to the SEC. Selig believes that the SEC’s definition of a security could be so broadly applied that “nearly anything can be a security.”
Mike Wawszczak, the general counsel for Alliance DAO, also weighed in on the topic. He suggested that SEC Chairperson Gary Gensler may want “complete discretion” in applying securities laws to any transactions. He tweeted that for this job, Gensler requested $2.2 billion in FY 2023, which is a large sum compared to San Francisco’s budget last year of $13 billion.
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 in this way, and described the SEC’s actions as “wild.”
Other members of the crypto community also joined 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 Terra and its founder has sparked a discussion on the implications of their decision, as similar sentiments were expressed on Twitter when the SEC decided to go after Paxos, claiming that the Binance USD (BUSD) stablecoin is a security. Community members argued that users of the stablecoin do not purchase it and expect its price to go up, and that this would set a worrying precedent for the crypto industry.
The web3 space is full of potential, and promotion and marketing of NFTs is becoming increasingly important. Terraform Labs and Do Kwon’s case is a reminder of the importance of understanding the complexities of the crypto industry, and the SEC’s regulations. Twitter NFT marketing can be a powerful tool for selling NFTs, and many web3 agencies specialize in providing NFT marketing services. It is important to be aware of the SEC’s rules and regulations when engaging in any type of crypto-related activity, and to seek advice from a qualified lawyer or NFT marketing agency if necessary.
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