tl;dr
The Securities and Exchange Commission (SEC) has filed a litigation against Consensys, clarifying that several prominent cryptocurrencies, including Terra Luna Classic (LUNA), Polygon (MATIC), The Sandbox (SAND), Chiliz (CHZ), and Decentrland (MANA), are considered securities. The SEC contends that ...
SEC Clarifies Stance on Cryptocurrencies
The Securities and Exchange Commission (SEC) has filed a litigation against Consensys, clarifying that several prominent cryptocurrencies, including Terra Luna Classic (LUNA), Polygon (MATIC), The Sandbox (SAND), Chiliz (CHZ), and Decentrland (MANA), are considered securities. The SEC contends that these digital assets were initially offered and sold as investment contracts, falling under the regulatory purview of securities laws. The SEC argues that the tokens were marketed with promises of future profits and were influenced by public statements, marketing materials, and operational strategies. The SEC specifically highlights MATIC, MANA, CHZ, SAND, and LUNA, providing details on how each token was marketed as an investment vehicle, leading to the classification as securities.
One of the tokens in question is MATIC, the native token of Polygon, an Ethereum scaling blockchain platform. Moreover, Polygon positions MATIC as essential for network transactions and governance, incentivizing holders through staking mechanisms and other economic activities. Hence, the SEC contends that since its inception, MATIC has been marketed and sold as an investment vehicle. It mentions that investors expect an increase in MATIC value driven by Polygon’s ongoing development and expansion efforts. They highlighted the details on MATIC’s whitepaper to prove their point.
Similarly, MANA, the digital currency of Decentraland, a virtual reality platform on Ethereum, has been categorized as a security by the SEC. MANA facilitates transactions within the Decentraland ecosystem and grants holders rights to participate in governance and content creation. The SEC pinpointed the sale of MANA tokens during its ICO and subsequent trading activities on platforms like MetaMask Swaps. Moreover, the agency noted that these activities were conducted with the implicit understanding of potential profit from Decentraland’s platform growth and adoption.
Another token under scrutiny is CHZ, the utility token for Chiliz. It is used on the Socios platform for fan engagement in sports and entertainment. CHZ enables fans to purchase and influence decisions in their favorite teams through voting rights and rewards programs. The SEC alleges that CHZ was promoted as an investment opportunity. It highlighted funds were raised explicitly earmarked for platform development, user acquisition, and marketing efforts. These factors all contributed to potential increases in CHZ’s value.
SAND, the token of The Sandbox, a virtual gaming platform powered by blockchain, is also highlighted in the SEC’s litigation. The SEC argues that SAND’s initial offering portrayed it as an investment vehicle. Hence, it is subject to securities regulations due to the expected returns tied to the platform’s success.
Lastly, Terra Luna Classic (LUNA), the native token of Terra, is included in the SEC’s classification as a security. LUNA facilitates stablecoin transactions and platform governance within Terra’s ecosystem. The SEC asserts that Terra Luna Classic’s issuance and trading involved expectations of profit. These expectations were based on Terraform’s development efforts and market adoption of Terra’s stablecoin solutions.
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