Declaring war on the entire industry: How did the US SEC identify more than a dozen tokens as securities?

The latest news is that the US SEC sued the cryptocurrency exchange Coinbase in a federal court in New York and listed SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH and NEXO as securities.

On June 5, 2023, the U.S. Securities and Exchange Commission (SEC) filed 13 charges against Binance and its founder Changpeng Zhao in the U.S. District Court for the District of Columbia, including operating an unregistered exchange, broker-dealer, and clearing agency; misrepresenting trading control and supervision on the Binance.US platform; and unregistered securities issuance and sales.

One of the main charges is the unregistered issuance and sale of securities. The US SEC alleges that the Binance platform widely sells crypto asset security tokens to anyone who creates an account, without limiting the purchase quantity or limiting the purpose. These assets can be transferred and resold on the Binance platform or other crypto asset trading platforms without obvious resale restrictions. Crypto asset issuers can offer, sell or distribute their crypto asset securities directly or through intermediaries through the Binance platform.

In the accusation against Binance and Zhao Changpeng, the US SEC not only identified BNB and BUSD as securities, but also ten common crypto tokens SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS and COTI as securities. The US SEC also stated that the US SEC had previously identified AMP, REP, UST and TRX crypto tokens as securities, which were also traded on the Binance platform.

These 10 tokens are listed on almost all major exchanges. From this perspective, the US SEC is almost waging war on the entire cryptocurrency industry.

In order to make the allegations credible, the US SEC spent nearly 40 pages explaining in detail why these 10 tokens are security tokens. After reading these allegations, Golden Finance reporters summarized for you how the US SEC determined that dozens of tokens are securities in 5 sentences for each token.

1. SOL

1. SOL is the native token of the Solana blockchain, which was created by Solana Labs to build decentralized applications. Solana Labs was founded in 2018 by Anatoly Yakovenko (referred to as "Yakovenko") and Raj Gokal (the current CEO and COO of Solana Labs). The founder of Solana Labs worked at the Solana Foundation, where Yakovenko was a member and chairman of the Solana Foundation committee.

2. SOL can be staked on the Solana blockchain to obtain rewards, and a small amount of SOL needs to be paid as a burning fee in transactions to prevent abuse.

3. Solana Labs has raised tens of millions of dollars through multiple securities sales and has conducted SOL sales on CoinList and Binance trading platforms. SOL can be bought, sold and traded on platforms such as Binance.US and Binance.com.

4. Solana Labs publicly promotes its expertise in blockchain development on its website and social media pages and demonstrates its efforts to develop the Solana blockchain protocol and attract users, who require a certain amount of SOL. Solana Labs conducts other promotional activities such as podcasts, YouTube channels, and various social media platforms to increase participation in the Solana network and SOL tokens.

5. Holders view SOL as an investment, expect to gain benefits from the development of the Solana protocol, and hope to increase the demand and value of SOL.

ADA

1. ADA is the native token of the Cardano blockchain, created by Charles Hoskinson and Jeremy Wood in 2015. The Cardano blockchain uses its own proof-of-stake consensus protocol, Ouroboros, which is known to be energy efficient.

2. Cardano has three entities in charge: the Cardano Foundation is the legal custodian and brand owner, IOHK is responsible for designing and building the Cardano blockchain, and Emurgo is the for-profit arm that drives commercial adoption.

3. After the initial mining, the Cardano Foundation, IOHK and Emurgo received a total of 5.2 billion ADA, accounting for approximately 16.7% of the initial token supply.

4. These three entities used the proceeds from ADA sales to fund the development, marketing, business operations, and growth of the Cardano protocol, including the implementation of the roadmap and the development of each “eras”.

5. The publicly disseminated information by the Cardano Foundation, IOHK and Emurgo has led ADA holders to reasonably view ADA as an investment in driving Cardano's growth and expecting to profit from it, thereby increasing the demand and value of ADA. They have detailed their expertise and efforts to develop the Cardano protocol on social media and websites, including plans to create smart contracts, introduce innovative functions and features, and improve network performance.

3. MATIC

1. MATIC is the native token of the Polygon blockchain, created by the founder of Polygon in 2017. Polygon is an Ethereum expansion platform designed to build scalable and user-friendly dApps and reduce transaction fees through side chains.

2. Polygon has issued 10 billion MATIC tokens, and holders can obtain additional MATIC through mortgage, delegation or pledge. MATIC is designed to provide economic incentives for Polygon, so that participants are motivated to provide services for the network.

3. Polygon raised funds through early sales and initial exchange offerings to support the development of the network, while retaining a portion of MATIC for ecosystem support and team compensation.

4. By publicly disseminating information, Polygon enables MATIC holders to expect to profit from the growth of Polygon, increasing the demand and value of MATIC.

5. Polygon regularly updates network growth and financial data and encourages MATIC to be considered an investment. In addition, Polygon reduces the total supply by destroying MATIC tokens, increasing investors' expectations of potential profits from MATIC.

4. Filecoin

1. "FIL" is the native crypto asset of the Filecoin network, which is an open source data storage network running on the blockchain. Filecoin's goal is to build a decentralized data storage network and create value by incentivizing miners to provide storage services and participate in the operation of the network.

2. Protocol Labs, Inc. is the laboratory that created the Filecoin network. They released the Filecoin white paper in 2014 and conducted a token sale in 2017. The FIL sale in 2017 raised more than $205 million for the development and growth of the Filecoin network.

3. The economic structure of the distribution of FIL tokens includes distribution to miners, Protocol Labs, investors, and the Filecoin Foundation. The economic structure of FIL distribution and public statements about the structure encourage investors to view FIL as an investment in the efforts of Protocol Labs and the Filecoin Foundation.

4. The tokens allocated to Protocol Labs and Filecoin Foundation will be unlocked in stages over six years after the network launch. Protocol Labs and Filecoin Foundation "aim to make Filecoin valuable in the long term and hope to attract investors who are equally interested in long-term value creation and growth", and "unlocking creates long-term consistency" because "Protocol Labs and Filecoin Foundation have a deep commitment to long-term commitments, and the 6-year unlocking is a clear demonstration to all other network participants."

5. Filecoin also implements a mechanism to destroy FIL tokens, thereby reducing the supply of FIL. Like the "destruction" mechanism of other crypto asset securities, Filecoin's advertised FIL destruction as part of its economic characteristics reasonably makes investors believe that the FIL they purchase has the potential to make a profit.

5. ATOM

1. ATOM is the native crypto asset of Cosmos Hub, and Cosmos is a blockchain ecosystem designed to achieve scalability and interoperability. The goal of the Cosmos team is to create a blockchain network that can communicate with each other in a decentralized manner.

2. The Cosmos Hub is a centralized blockchain that provides services to other blockchains connected to it, including cross-chain token swaps, shared security, bridging with Ethereum and Bitcoin, and secure custody of digital assets.

3. ATOM is described as a license for holders to vote, validate, or delegate to other validators, and can be used to pay transaction fees.

4. ICF is one of the entities with significant ties to Cosmos development, having raised approximately $17.3 million in investor funds in the Cosmos fundraising event in 2017.

5. Overall, ATOM holders view it as an investment in the development of the Cosmos protocol and expect to profit from it, which increases the demand and value of ATOM.

6. SAND

1. "SAND" is the native token of The Sandbox, a platform created on the Ethereum blockchain. It was first developed by Pixowl, Inc. as a mobile game in 2012 and acquired by Animoca Brands in 2018.

2. SAND tokens are used to access the sandbox platform, participate in governance, and receive rewards through the staking program.

3. Animoca Brands raised approximately $2.5 million in cash and crypto assets through future equity agreements (SAFEs) and SAND token sales before SAND tokens were minted. The round was led by Hashed and participated by other cryptocurrency venture investors.

4. SAND tokens, with a total supply of 3 billion, were minted on the Ethereum blockchain in July 2019 and raised funds through private sales and an IEO on the Binance.com platform in August 2020.

5. SAND tokens can be traded on trading platforms such as Binance.US. The Sandbox team plans to manage the token market by controlling the supply mechanism. The funds raised will be used for platform development, marketing, legal fees and administrative costs. The Sandbox Foundation supports the development of the ecosystem and encourages the creation of high-quality content and games.

7. MANA

1. Decentraland is a virtual reality platform founded by Metaverse Holdings and launched to the public in February 2020. Its native token is MANA, with a total supply of approximately 2.19 billion, which can be traded on platforms such as Binance.

2. MANA tokens play an important role in the Decentraland virtual reality ecosystem and are used for all transactions. In 2017, approximately $24.1 million was raised through ICO, part of which was allocated to early contributors to purchase MANA at a discounted price.

3. Decentraland continues to develop the platform and controls the supply of MANA through a continuous token model to support the expansion of the platform and improve the user experience.

4. Decentraland created the Decentraland Foundation, which owns the intellectual property rights of the platform. Of the initial supply, 20% is allocated to the founding team and early contributors, 20% is allocated to the foundation, 40% is available for public purchase, and the remaining 20% ​​is used to incentivize early users and partners.

5. Decentraland promotes network development through financial incentives such as competitions, bonuses, and subsidies, and implements a destruction protocol when using MANA tokens.

8. ALGO

1. "ALGO" is the native token of the Algorand blockchain, with a total supply of 10 billion. Algorand is a blockchain protocol founded by Silvio Micali, using the "pure proof of stake" consensus algorithm.

2. The Algorand Foundation conducted its first ALGO token sale in 2019, raising approximately $60 million. They offer a refund policy that allows investors to return ALGO tokens at 90% of the original purchase price after one year.

3. The Algorand Foundation continues to distribute tokens through reward programs and incentive structures. As of September 2022, there will be approximately 6.9 billion ALGO tokens in circulation.

4. Algorand and the Algorand Foundation collaborate on projects and initiatives for the Algorand community. They promote the Algorand protocol and claim to use their founder tokens in protecting the network, supporting ecosystem development, and encouraging development.

5. The Algorand Foundation has taken measures to incentivize third-party participation and attract users to use the ALGO protocol, such as launching incentive programs and establishing the AlgoHub virtual community. These efforts have increased expectations for Algorand's technology and ecosystem, and may increase demand for ALGO.

9. AXS

1. Axie Infinity is a blockchain game developed by Sky Mavis, where players can interact in a virtual world through digital pets called "Axies". The native token in the game is Axie Infinity Shards (AXS for short).

2. Sky Mavis is led by CEO Trung Nguyen and COO Aleksander Leonard Larsen, with a team of 40 full-time employees. The team is responsible for key decisions such as product development, marketing, digital design and software engineering.

3. Players of Axie games can earn AXS tokens by successfully playing games, and can use AXS for in-game purchases. AXS can also be staked in the Axie ecosystem. The total supply of AXS is 270 million, with more than 100 million in circulation.

4. In 2020, Sky Mavis raised approximately $864,000 in AXS tokens from strategic investors in a private sale. They also conducted a public sale event, distributing 29.7 million AXS tokens and raising $2.9 million for Axie. AXS tokens sold to strategic investors were sold at a 20% discount to the public offering price and were gradually unlocked over a two-year period according to a quarterly unlocking schedule.

5. AXS tokens became tradable on the Binance.com platform in October 2020 and on the Binance.US platform in November 2021. The information publicly released by Sky Mavis makes it reasonable for holders who have purchased AXS since August 2021 to view it as an investment, expecting to profit from Sky Mavis' efforts to increase the Axie protocol, thereby increasing the demand and value of AXS.

10. COTI

1. Coti is a company that claims to provide digital infrastructure for payments, and its native token is COTI. The company was founded by Samuel Falkon and David Assaraf, and its CEO is Shahaf Bar-Geffen. Coti's website is registered and operated by Coti (BVI) Limited in the British Virgin Islands.

2. Coti conducted an IEO on June 4, 2019, raising approximately 46 million COTI tokens and approximately $3 million. The maximum supply of Coti is 2 billion COTI.

3. COTI has been available for purchase, sale and trading on the Binance.com platform since February 2020, and on the Binance.US platform since April 2022. The information publicly disseminated by Coti makes it reasonable for COTI holders to view it as an investment and expect to profit from Coti's efforts to grow the Coti protocol, thereby increasing the demand and value of COTI.

4. Coti announced the allocation of private sales and seed sales before IEO. The private sale accounted for 10.01% of the total supply at a price of $0.08 per COTI, and the seed sale accounted for 2.87% of the total supply at a price of $0.06 per COTI.

5. Coti introduced team members and their efforts to develop the Coti blockchain and attract users through social media, Medium articles and public statements on the website. They emphasized the integrated development within the company, providing one-stop solutions for enterprises, and looked forward to future plans and growth.