Don’t sleep on the SEC’s action against Do Kwon and TFL. The complaint includes a ton of novel legal theories that can be applied to stablecoins, wrapped tokens, liquidity pool tokens and other crypto assets. Steady lads… /1
The SEC isn’t just classifying crypto assets as investment contracts or notes anymore. The SEC alleges wrapped tokens to be securities because they are a “receipt for a security” and a stablecoin to be a security because it is a “right to subscribe or purchase a security.” /2
The SEC’s receipt theory can be leveraged to indirectly target crypto assets such as ETH by bringing an action against the issuer of a corresponding wrapper and arguing the wrapped asset is a security so therefore the wrapper is a receipt for a security. /3
The SEC theory that a stablecoin that’s convertible to a security is a “right to purchase or subscribe to” a security can be used against almost any crypto asset. FinCEN uses this reasoning to regulate all crypto assets as monetary value bc they’re convertible to money. /4
https://twitter.com/mikeseligesq/status/1626341657409949697
The SEC reasons that a token w/o native yield is an investment contract bc purchasers expected profits based on the ability to deposit it into a yield protocol supported and marketed by the issuer. This may be leveraged against L1/L2 grants and defi liquidity programs. /5
https://twitter.com/jlb410/status/1626394601048227841
Hopefully bad facts and unsympathetic defendants don’t make bad law here. /6
https://twitter.com/RyanSAdams/status/1626355874447982593
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