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Interesting developments continue to occur in cases related to the cryptocurrency markets. In this regard, attorneys representing the Securities and Exchange Commission (SEC) have made a notable request in a lawsuit against Terraform Labs and its co-founder Do Kwon. They have requested the judge to determine whether certain crypto assets are securities instead of leaving the decision to a jury.
SEC’s Request for the Court Process
In a filing made on December 4th in the Southern District of New York, the SEC argued that the question of whether crypto currencies defined as securities according to the commission’s guidelines is a factual question for the jury, but rather a legal question that should be determined by the court.
According to SEC officials, the case against Terraform Labs has opened up a discussion on whether certain crypto currencies should be classified as securities under the Howey test. SEC officials made the following defense regarding the matter:
“There is no genuine material dispute that the defendants’ crypto asset offerings involve an investment of money in a common enterprise with the expectation of profits solely from the efforts of others. While the court may direct questions to the jury to resolve factual disagreements on essential elements, no such disagreement exists here. There are no factual questions as to how the defendants’ crypto assets were sold, the terms of these offerings and sales, or what the defendants said in their marketing materials or surrounding promotions.”
Battle Between SEC and the Crypto Market
The SEC has taken it upon itself to classify various crypto currencies as securities, including taking enforcement actions against Binance and Coinbase. In a case against Ripple, a federal judge ruled in July that XRP did not need to be classified as a security, allowing SEC to drop its charges against Ripple Labs CEO Brad Garlinghouse and Chairman Chris Larsen.
The question of which crypto currencies will be classified as securities or commodities in the United States has sparked an ongoing debate between lawmakers and regulators about the role that the SEC should play in the legal regulation of crypto assets. Many experts predict that the SEC may soon decide whether to approve a product traded on a spot crypto exchange for the first time.
