The Solana Foundation responded to the United States Securities and Exchange Commission (SEC) after the agency listed the altcoin SOL as a Security in the lawsuit filed last week against Binance.US.
In a Tweet released yesterday, the Foundation Solana tells the SEC that he does not agree that SOL is a security. He also says that he is betting that greater regulatory clarity on “these issues will be achieved for the thousands of entrepreneurs across the United States building in the digital asset space.”
However, in the document 136-page in which the SEC makes its submission against Binance, the agency is forceful in explaining the reasons why it considers that SOL is a value and for which, in his opinion, this crypto-asset should be subject to the Securities Law of the United States.
In the first instance, the SEC points out that between May 2018 and early March 2020, Solana Labs submitted to the agency “multiple forms regarding its offer and sale of securities.”
These forms were filed to issue tokens through a Simple Agreement for Token Futures (SAFTS) that were exempt from registration under rule 506 of the Securities Act.
Solana is a project founded in the United States, in 2018 by Anatoly Yakovenko and Raj Gokal through an ICO Initial Coin Offering with which they managed to raise more than 300 million dollars. This fact is highlighted by the SEC in its lawsuit, and in it it mentions the efforts of Solana Labs to make its altcoin available on crypto asset trading platforms.
in 2020 Binance.US added support for SOL to be available. In a Twitter post on September 17, 2020, Solana Labs stated: “the Solana community in the United States has been eagerly awaiting the opportunity to trade and now that day has arrived,” according to the SEC filing.
Initially the crypto asset was available for the United States market on FTX USA and later on Binance.US. and just That’s the argument put forward by the SEC. to affirm that SOL is an asset aimed at US investors, the jurisdiction that it is responsible for regulating.
More SEC arguments against Solana Labs
In its filing against Binance, the SEC focuses on presenting a series of arguments for come to the conclusion that the Solana altcoin is a security. In the 2 pages that he dedicates to this cryptoactive, he comments the following:
“Since initial sales, in September 2020, SOL is reasonably considered an investment and its owners expect to benefit from Solana Labs’ efforts to grow the Solana protocol, which, in turn, would increase demand and value for SOL.”
SEC lawsuit against Binance dated June 6.
As explained by the SEC, there is sufficient evidence to show that SOL is a share of Solana Labs and for this reason it affirms that its owners should understand it that way, “those who have invested in the protocol with the expectation that it will increase in value.”
According to the CriptoNoticias glossary of terms, a security is a document that incorporates a right of patrimonial content. Is about an instrument that demonstrates the ownership rights of the holder over a companyas in this case Solana Labs does.
On this issue, SEC Chairman Gary Gensler says that “anything that is not bitcoin falls under the control of the SEC.” He bases his claims on the Howey’s testa parameter that derives from the name of a judicial case that was debated in the United States in 1946 and that is used by the SEC to classify assets and decide whether or not they are securities.
Gensler ensures that the actions of the promoters of cryptocurrencies that emerged after the creation of Satoshi Nakamoto resembles that of businessmen who benefit from the growth of the shares of their companies. That explains why those tokens are considered securities (security) and not goods (commodities), as is BTC.
Consequently, since no altcoin has so far been registered with the SEC as a security, the body points out that its trade is illegal in the United States. Only Bitcoin has regulatory certainty in this part of the world.
The SEC also makes arguments related to the methods used by Solana Labs to promote their altcoin with the idea of increasing the demand for the asset and therefore its value. In one of these arguments he points out the following:
“In an April 14, 2021 post on gemini.com in which Yakovenko touts the ability of Solana’s network to ‘support a theoretical peak capacity of 65,000 transactions per second today’ (about 10,000 times faster than Bitcoin, 4,000 times faster than Ethereum and 35,000 times faster than Ethereum, even 2.5 times faster than Visa) and projecting that speed to double every two years with improvements in hardware and bandwidth.”
SEC lawsuit against Binance dated June 6.
Although he doesn’t mention it directly, with those ideas, and others like them, the SEC suggests that it already has records that the development team behind Solana Labs has wanted increase demand and value of SOL under questionable methodss. This is because, despite his promises, Solana’s network has suffered several outages, most of them related to high transaction volumes.