Feb 18, 2023
SEC Accused of Wildly Applying Securities Laws to Crypto Transactions
The United States Securities and Exchange Commission (SEC) has recently set its sights on Terraform Labs and its founder, Do Kwon. On February 16, the SEC charged Kwon and Terraform Labs with allegedly selling a suite of crypto asset securities.
The crypto community has had various reactions to the SEC’s move. Web3 lawyer Mike Selig commented on Twitter that the SEC is characterizing the algorithmic stablecoin TerraUSD Classic (USTC) as a security because it can be exchanged for Luna Classic (LUNC). According to Selig, this theory implies that almost anything can be a security.
Mike Wawszczak, the general counsel for Alliance DAO, also weighed in on the issue. He suggested that SEC Chair Gary Gensler may be aiming for complete discretion when it comes to applying securities laws to any transaction. Wawszczak noted that Gensler had requested $2.2 billion for this purpose in the 2023 fiscal year.
Justin Browder, a partner at the law firm Willkie Farr & Gallagher, likened the SEC’s description of USTC’s use to generate returns to depositing fiat in a bank. He further questioned whether there is any other non-security currency that behaves in this way, and described the SEC’s actions as “wild.”
Other members of the crypto community have also expressed their views on the matter. Dylan Daniel believes that if everything is labeled a security, the SEC will need to expand and scale itself. He hopes that Gensler has a solid plan in place.
This comes after the SEC’s decision to go after Paxos, claiming that the Binance USD (BUSD) stablecoin is a security. Many community members were confused by this, as they argued that users of the stablecoin do not purchase it expecting its price to go up.
The SEC’s move to target Terraform Labs and its founder has sparked a debate about the application of securities laws to the crypto space. As the web3 space continues to grow, the need for NFT promotion and marketing is becoming increasingly apparent. NFT marketing agencies, such as the Web3 Agency, specialize in helping companies in the space to promote and sell their NFTs. By utilizing Twitter NFT marketing and other strategies, these agencies can help companies to reach their target audience and maximize the success of their NFTs.
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