Jury in Terraform Labs case should not decide whether crypto is a security – SEC
Attorneys representing the United States Securities and Exchange Commission have asked the judge to file a civil lawsuit against Terraform Labs and co-founder Do Kwon.
In a Dec. 4 filing in the U.S. District Court for the Southern District of New York, the SEC argued that the issue of cryptocurrencies as securities is a “question of law to be determined” under the commission's guidelines. [by] It is a real question for the jury, not the court. According to the SEC, sending questions about whether some of the cryptocurrencies in the Terraform Labs case qualify as securities under the Hawaii test — the commission's standard for determining what constitutes a security — opened the issue up for discussion.
“There is no genuine dispute that the defendants' crypto asset offerings were an investment of money in anticipation of profits from the defendants' efforts,” the SEC said. “When the court can submit questions to the judges to resolve the disputes that arise in the underlying cases […], there are no arguments here. There are no material questions regarding how Defendants' crypto assets were sold, the terms of those offers and sales, or what Defendants said in their marketing materials or surrounding promotions.
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The SEC has taken it upon itself to name various cryptocurrencies as securities in various lawsuits, including enforcement actions against Binance and Coinbase. In the commission's case against Ripple, a federal judge ruled in July that the XRP (XRP) token does not qualify as a security, which could lead to the dismissal of charges against SEC CEO Brad Garlinghouse and executive chairman Chris Larson.
In the United States, the question of what securities or commodities qualify as cryptocurrencies has been an ongoing debate among lawmakers and regulators, as has the role the SEC should play in regulating digital assets. Many experts also speculate that the SEC may soon decide on the first approval of a crypto exchange-traded product.
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