Coinbase CLO asks SEC to backtrack on definition of crypto assets

The US Securities and Exchange Commission (SEC) has apparently followed up on previous statements suggesting that crypto assets are themselves securities.

This retraction comes amid the agency’s ongoing legal case against Binance, one of the world’s largest cryptocurrency exchanges.

SEC “Regrets” the confusion caused by the wording

Paul Grewal, Coinbase’s chief legal officer (CLO), drew attention to the SEC’s change in an X post published on September 13.

In it, the lawyer shared a screenshot of footnote 6 in the regulator’s amended filing against Binance, where he explained that he was not labeling crypto assets as securities, but was referring to investment contracts in the around him The agency also stated that it “regrets any confusion it may have invited” by implying otherwise.

This update was significant, given that the term “crypto-asset securities” has been a point of contention in the watchdog’s legal battle with the industry.

Grewal’s counterpart at Ripple, Stuart Alderoty, has been an outspoken critic of the SEC’s language. Recently, on social media, he criticized the agency for coining the term “crypto-asset security” without any legal basis. “It’s a made-up term with no legal basis,” Alderoty argued, accusing the regulator of misleading the courts and the public.

His comments came after the financial authority used the language in a challenge against FTX, claiming that the bankrupt exchange’s stablecoin holdings were “crypto-asset securities.”

Binance accused of offering unregistered securities

Many within the crypto community have criticized the regulator for its inconsistent messaging, with some alleging it is a deliberate part of its broader “regulation by enforcement” campaign.

A case in point is the SEC’s lawsuit against Binance, where the Commission claims that the exchange offered unregistered securities to the public, including its native token BNB.

He also accused the crypto firm of improper practices, including commingling client assets and engaging in wash trading to inflate trading volumes through an entity controlled by its former CEO, Changpeng Zhao.

Despite the serious charges, the crypto exchange has consistently denied any wrongdoing, stating that user funds were never at risk and that it has always complied with legal requirements.

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