According to the U.S. Securities and Exchange Commission (SEC), the cryptocurrency assets MATIC, MANA, CHZ, SAND, and LUNA are considered securities because they are sold as investment contracts when they are issued. This means that these assets meet the definition of the Securities Act and are therefore subject to its rules and regulations.
The SEC’s ruling is based on the following factors:
The manner in which these assets are issued and promoted indicates that investors expect to profit from the efforts of the issuer and promoter. The prices of these assets are based on the efforts of the issuers and promoters, rather than on any intrinsic value or utility. Investors in these assets lack control over the issuer and promoter.
Specifically, the SEC found:
MATIC is the native token of the Polygon blockchain. Through various public statements and marketing campaigns, Polygon co-founders and other early investors promoted MATIC as an investment whose price would profit from the growth and development of the Polygon network. MANA is the native token of the Decentraland virtual reality platform. Through various public statements and marketing campaigns, the Decentraland team promotes MANA as an investment whose price will profit from the growth and development of the Decentraland platform. CHZ is the native token of the Chiliz sports and entertainment ecosystem. Through various public statements and marketing campaigns, the Chiliz team promotes CHZ as an investment whose price will profit from the growth and development of the Chiliz ecosystem. SAND is the native token of The Sandbox virtual world platform. Through various public statements and marketing campaigns, The Sandbox team promotes SAND as an investment whose price will profit from the growth and development of The Sandbox platform. LUNA is the native token of the Terra blockchain. Through various public statements and marketing campaigns, Terraform Labs co-founders and other early investors promoted LUNA as an investment whose price would profit from the growth and development of the Terra ecosystem.
How does the SEC’s ruling impact investors in these crypto assets?
The SEC’s ruling could have a significant impact on investors in these crypto assets. These include:
These assets will now be subject to Securities Act rules and regulations, which may mean they will be subject to stricter regulatory and disclosure requirements. Trading in these assets may be restricted, for example trading may only be done through registered brokers. Investors in these assets may be subject to greater risks because they may not receive the same protection as investors in securities.
It is important to note that the SEC's ruling may be subject to legal challenge. For now, however, the ruling could have significant implications for investors in these crypto assets.
Here are some additional resources you may find useful:
SEC Enforcement Actions Targeting MATIC, MANA, CHZ, SAND, and LUNA: https://www.sec.gov/Complaint.html Cryptocurrency Investor Information on the SEC’s Website: https://www.sec.gov/securities-topics /crypto-assets