Solana, Cardano, Polygon Push Back Against SEC ‘Security’ Label

The organizations behind several popular cryptocurrencies have spoken out against recent claims made by the Securities and Exchange Commission (SEC)—which argued that Solana (SOL), Polygon (MATIC), and Cardano (ADA) are securities.

The SEC named the three among a slew of other tokens as examples of securities being offered and traded on allegedly non-compliant crypto exchanges as part of its lawsuits against Binance and Coinbase last week.

Solana, Polygon, and Cardano are among the lawsuits’ most recognizable tokens, placing within the industry’s top 20 by market capitalization, according to CoinGecko. Combined, the three tokens have a market capitalization of over $21 billion—equal to around one-tenth of Ethereum’s total value.

Over the past seven days, the trio of tokens have tumbled around 30% each, according to CoinGecko. Yet, as of this writing, they staged a partial comeback on Sunday—paring back a small portion of losses.

Among the big three altcoins, Cardano was the first to have its regulatory status defended by a founding organization. On June 6, the blockchain research and engineering firm that created Cardano, Input Output Global (IOG), said ADA has never been a security under U.S. securities law.

The SEC’s latest lawsuits will not impact the company’s operations “in any way,” IOG said, adding that the firm welcomes a collaborative approach with regulators that would preserve the possibility of innovation while protecting consumers.

“This latest filing from the SEC demonstrates that we still have a long way to go,” IOG added. “Regulation through enforcement action does not provide either the clarity or certainty to which both the blockchain industry and consumers are entitled.”

On Saturday, the Solana Foundation, a non-profit dedicated to Solana and based in Switzerland, delivered a similar message—albeit with less conviction.

Instead of outright asserting that Solana isn’t a security, the Solana Foundation said on Twitter it “disagrees with the characterization of SOL as a security.”

The organization underscored its commitment to working with regulators in the statement, similar to IOG, explaining “regulatory clarity” is an issue that impacts everyone in the digital assets space that’s “building” in the U.S.

The Solana Foundation disagrees with the characterization of SOL as a security. We welcome the continued engagement of policymakers as constructive partners on regulation to achieve legal clarity on these issues for the thousands of entrepreneurs across the U.S. building in the…

— Solana Foundation (@SolanaFndn) June 10, 2023

Meanwhile, members of the Solana community are debating the viability of forking Solana—contemplating whether splitting off and creating a new network would be the best path forward, similar to what Ethereum did following The DAO hack in 2016.

Some, such as HGE.ABC on Twitter, said it could also be a way to skirt around the potential impact of FTX’s bankruptcy, where a substantial amount of Solana tokens owned by Alameda Research, former FTX CEO Sam Bankman-Fried’s trading firm, could hit the open market over the following years.

“[A] community fork [of] Solana will get rid of SEC issue,” HGE.ABC said. “[And] no bankruptcy will dump on you for [the] next 3 years continuously.”

Bold but not a bad idea actually. Community fork solana will get rid of sec issue.

No bankruptcy will dump on you for next 3 years continuously.$ETH is a fork of $ETC and doing well.

Blink twice if you agree https://t.co/fWxbkMQ4aI

— HGE.ABC (@HGEABC) June 10, 2023

Hours after the Solana Foundation commented on the SEC’s point of view, Polygon Labs chimed in on Twitter.

The company behind Polygon did not say its Ethereum scaling solution’s token is not a security—nor did it explicitly mention the SEC. But Polygon Labs did try to distance MATIC from U.S. markets.

The company said Polygon was developed and deployed outside of the U.S., and drew attention to a “global community that supports the network.” Focusing on the coin’s utility, Polygon Labs said MATIC was needed to secure its Polygon network from launch.

Additionally, Polygon Labs said it has conducted itself in a way where U.S.-based persons were not targeted—possibly laying the groundwork for a legal argument over regulatory jurisdiction regarding MATIC.

“We are confident in the actions we took in the past,” Polygon Labs said. “Given our focus on network security, we made sure MATIC was available to a wide group of persons, but only with actions that did not target the U.S. at any time.”

Since the SEC’s regulatory double-tap against Binance and Coinbase, the trading app Robinhood has said it will end support for Solana, Polygon, and Cardano, explaining that the lawsuits have “cast a cloud of uncertainty” around the cryptocurrencies in question.

Other companies could potentially follow suit, but each coin’s respective organization is trying its best to clear its currency’s name in the meantime.

Source