SEC Backpedals on ‘Crypto Asset Securities’ Term in Binance Case

The U.S. Securities and Exchange Commission (SEC), known for scrutinizing crypto companies over their treatment of “crypto asset securities,” has recently clarified that it never intended to suggest that the tokens themselves are securities.

In a surprising twist amid its ongoing legal action against Binance, the SEC has explained in a footnote of its revised complaint that its use of the term “crypto asset securities” refers to the broader framework of contracts, expectations, and agreements related to these tokens, rather than the tokens themselves. The agency described the term as simply an “acronym” and not indicative of the tokens being securities.

To prevent further confusion, the SEC has decided to discontinue using the term in its lawsuit against Binance and has expressed regret for any misunderstandings.

The crypto community has reacted with skepticism to the SEC’s statement. Jake Chervinsky, Chief Legal Officer at Variant Fund, expressed disbelief at what he views as extreme manipulation on X (formerly Twitter).

Coinbase’s Chief Legal Officer, Paul Grewal, criticized the SEC for inconsistencies, pointing out that the agency refers to XRP as a “digital asset security” in its complaint against Ripple. Ripple’s Chief Legal Officer, Stuart Alderoty, also voiced concerns, labeling the SEC’s position as a “twisted trap full of contradictions.”

Alderoty questioned whether the SEC is admitting that “crypto asset security” is an invented term and whether proving such a classification requires evidence of associated contracts and expectations.