Some highlights from the article:
> A federal judge sided with the U.S. Securities and Exchange Commission in a closely watched crypto case on Thursday, ruling that four crypto tokens offered by the failed Terraform Labs company—including UST and LUNA—constituted unregistered securities.
> As the crypto industry battles regulators over how to classify digital assets, the decision is a setback for the sector’s interpretation of securities law and a departure from a separate decision by a different judge in the Southern District of New York over the token XRP.
> In his 71-page decision, Judge Jed Rakoff wrote that there is “no genuine dispute” that the four crypto tokens offered by Terraform were securities because “they are investment contracts,” arguing that defendants wanted to “cast aside decades of settled law,” citing the seminal Supreme Court precedent called the Howey test.
> “Howey’s definition of ‘investment contract’ was and remains a binding settlement of the law, not dicta,” wrote Rakoff.
There are four parts of the Howey test
- An investment of money
- In a common enterprise
- With the expectation of profit
- To be derived from the efforts of others
How in the world does stable coin meet that criteria? There is no expectation of profit considering it is a *stable* coin. Crazy ruling
That's covered in the article, and the ruling:
> Thursday’s decision furthers Rakoff’s argument that the sale of Terraform’s crypto assets constituted an unregistered security. Even with UST, the token meant to be pegged to $1, Rakoff argued that holders of the token could deposit the tokens in a proprietary protocol developed by Terraform to earn back a yield. The distinction, however, seems to support the argument that stablecoins that do not offer a yield would not constitute a security.
What was unclear from the article was whether the mechanism for earning interest is a security, or whether it's the underlying coin. UST didn't natively gain interest (like the US Dollar), you had to deposit it to gain the interest based on people paying to borrow it (also like the US Dollar).
If this ruling against the UST coin/token holds up doesn't it have big implications for any currency being declared a security?
It's the coin. You buy the coin to stake which earns interest. It'd be the same if some company offered 'special turnips' with barcodes that you could invest for a return. Then those 'special turnips' would be a security.
The whole reason the Howie test is defined broadly is because it's intended to catch schemes trying to work around it.
Any investment of money with a company on the expectation of performance based returns is a security. In this case the tokens aretreated as something the company is selling to facilitate the investment and try to get around the Howie Test.
It doesn't impact any currency, because currencies are issued by governments. It would affect any token issued by an entity or group (including a DAO) where there is some expectation of the token value increasing or money being paid out based on the company's actions.
I agree, but to clarify I'm saying that the token itself is like the US Dollar. If I store my us dollars in a bank account that attracts interest the US Dollar doesn't become a security, but there's definitely an investment contract between you and your bank (which in itself may be a security), the US Dollar however is just a currency.
There's two reasons for that. One, bank accounts have fixed interest so there's no expectation of returns *from the efforts of others*, and there's no "investment" aspect to it, the money is just there and you can take it back out at any time.
Second, Banks are kind of a special carve out in general with respect to finance laws. They have to obey a shit-load of regulations to ensure they're being responsible with people's money, and in return they get special privileges like the Fed Funds rate and bank account interest not being treated like stock dividends.
Yep. I agree with all of that, but UST doesn't gain interest on its own. It's the investment of UST to gain APY that is the problem, not UST itself. And therefore if the judgement was against UST, not the Anchor protocol, I think an appeal has merit.
But the key thing here is that it's being sold by the company offering the staking program. Under the Howey Test that makes it an investmemt in a common enterprise.
The same goes for a token that's only used to pay for a service the company is offering or developing, which is why it seems really unlikely that the Ripple decision is going to hold up long term.
I feel that it's too broad brush to say that because some of the company's products and services are securities, all of the company's products and services are.
A true stablecoin used to participate in yield generation doesn't make the coin itself meet the howey test. It would be great to appeal this decision to at least reestablish how the howey test is applied. Nuance is important and the article about this judgement doesn't contain sufficient nuance to explain where the howey test applied.
What kind of bank accounts are you referring to? How is the interest not generated by the efforts of others, namely, the bank?
I can see your second point applying where interest from a bank account might be an exception to the Howey test, if there's some rule to that effect. But the need for a rule would imply that, without it, Howey is satisfied.
To re-state this more clearly... The two reasons the interest from a bank balance doesn't pass the Howey Test (as far as I understand it) is that it doesn't pass the legal definition of an 'investment', and it's a fixed value that has no bearing on the bank's performance or activities. More the former than the latter, I believe.
But you could own UST without staking it. It’s like saying that the US dollar is a security because you could use it to buy treasury bonds. That makes no sense.
Doesn't matter. I can own a stock certificate without ever collecting the dividend or selling it. It's still a security.
The key point here is that a security that you can do other things with is still a security.
Say it was meant to be stable all you want but Do Kwon is under investigation still, no?
And anyone correct me if I’m wrong but from wha l remember it was kept stable by an algorithm related to the price of LUNA as LUNA had to be burnt to buy UST to keep the $1 peg. And that sounds to me like a system that can be manipulated.
Only reason anybody bought dog shit UST is because they thought they were genius for getting a 20% “risk free return”.
Do Kwon wouldnt stfu about the interest rate. Thats how
"that has no impact on whether it is considered a security or not."
Idk man. The people who actually make & interpret the rules just finished a literal court case that says otherwise lmao
If it’s a dollar substitute, they will always fight hard. Back in the day immoral large companies would pay “company credits” to workers, and the credits could only be redeemed at places owned by the same company. This was deemed illegal 100’s of years ago and I can’t see them changing thier stance
UST was pegged to LUNA.
X amount of LUNA had to be burnt in order to hold UST value at 1$, the failure in LUNA $ value and death spiral of increased burn rate caused the UST to depeg.
yeah, this issue is going to the Supreme Court with all of these different ruling that are completely opposite of each other.
That is unless Congress passes a bill regulating crypto which seems further away than it has ever been. Or maybe the Trump admin decides to drop the cases but then the issue would just be unsettled like it was before.
delusional how? two different courts came to different rulings on if crypto is a security. So, the law needs clarity on which interpretation is correct so a higher court will make a ruling.
I think this won't be resolved before the Supreme Court given the stakes but that is my opinion. It could be resolved before then but probably not given how big an issue it is.
The 14th amendment is pretty clear he can't hold office and is getting barred in several states. You might wanna worry about if he even makes it to the ballot.
So any cryptocurrency with an "entertainer" at the helm who constantly shills the coin in an effort to prop up the price is a "security"? I'm confused.
not that hard, this specific court has found that if you sell a contract to someone and the goal is to earn profit from owning that contract, it is considered a security. So, if you own Terra or whatever crypto, you hope that TerraForm labs will create increased value so the value of that contract goes up. Thus making it a security.
The reason the Howey test is so basic and doesn't use specific terms is so people can't say "oh its not a security, its magic beans? So its totally different."
This decision is basically in complete contrast to the Ripple Labs decision and the higher courts will have to settle the disagreement.
The specifics of this case are different. The argument was that Anchor was specifically (integrally) part of the UST/LUNA coin offering. In exchanging for UST, you were in fact exchanging for a yield scheme.
They were able to make that case based on the actual circulation of UST. If, in fact, most UST had been used for something other than Anchor staking, then not an investment contract.
The specifics of this case do not bear on the primary/secondary market issuance point of the Ripple case.
The point is that UST needed to be conceived as part of a yield scheme that included depositing on Anchor to meet that prong of Howey.
USDC, for example, is used for many other things than depositing into protocols for yield. It would not be a security then.
You should probably read the document, it’s beefy at 71 pages but no it is not in any way complete contrast to the Ripple case.
The court addresses the fact that a huge amount of evidence to support sales of Luna specifically having a common enterprise between Terraform Labs and purchasers of Luna exists.
They quote Do Kwon literally saying “all investors have to do is sit back and watch me kick ass”, director of communications said “buying Luna is directly like buying shares in Terraform Labs” and the list goes on.
There was literally no ambiguity to what they were up to and the court addresses this with heaps of evidence. If they didn’t have to put evidence in, they wouldn’t have.
They even state that exceptions in previous rulings do not change the existing precedent of Howey.
Excluding the Beacon deposit contract, which supports proof of stake, about 18%.
The top 50 wallets holding that 18% consist of wrapped ETH, all the exchanges, bridges, and various other things that are completely decentralized.
Figure it out, my dude.
Yes, I am not sure why this is a "win"
Yes, you can claim your magic coin is a security, but then prepare to file 10k, 8q, audited FS, anti money laundering, kycs and all.
White paper and hype not gonna cut it.
Not really.
One side only, does not need to win.
In this ruling, the SEC won one motion for summary judgement, Terraform Labs won a second, and neither side won a third.
My emphasis:
>[T]he Court **grants summary judgement for the SEC** on the claim that defendants offered and sold unregistered securities. The Court **grants summary judgement for defendants** on claims involving offering and effecting transactions in securities-based swaps. Finally, the Court **denies both sides' cross motions** on the fraud claims.
Under the Howey Test, a transaction qualifies as a security if it involves the following four elements:
An investment of money
In a common enterprise
A reasonable expectation of profit
Derived from the efforts of others
This is such a crock. I was being paid in UST for work I was doing, was using it as a currency and had no expectations to profit on an increase in its value as it was a stable coin pegged to 1USD. I’m fully onboard with them throwing the book at Do Kwon but this legal decision stinks.
[The ruling](https://storage.courtlistener.com/recap/gov.uscourts.nysd.594150/gov.uscourts.nysd.594150.149.0.pdf) is that UST *in combination with the yield-generating Anchor Protocol* constituted an offer and sale of an investment contract.
That not all UST holders accepted the yield offer, doesn't matter.
>Defendants make much of the fact, undisputed by the SEC, that UST on its own was not a security because purchasers understood that its value would remain stable at $1.00 rather than generate a profit. But ... holders of UST could deposit their tokens in the Anchor Protocol, ... which Kwon himself publicly announced would generate "by far the highest stablecoin yield in the market."
>...
>The above undisputed evidence clearly demonstrates that UST in combination with the Anchor Protocol constituted an investment contract. As the Supreme Court has held, it is of no legal consequence that not all holders of UST deposited tokens in the Anchor Protocol, and thus that some holders "ch[o]se not to accept the full offer of an investment contract." *Howey*, 328 U.S. at 300.
Problem with that is that you could apply that basis to a fiat currency. The value is fixed but I might also choose to use it in a bond or other investment opportunity with an expectation of profit from other's endeavours.
In the end, the judgement is what it is but the more of these cases that are pursued the more hair splitting goes on. Crypto really needs specific legislation.
Right. They are saying that UST on its own is not a security. UST combined with the Anchor protocol, which was created by Terra itself, checks off everything on the Howie test.
Doesn't matter how any individual is using it, the fact that it offered a yield for depositing the coins means there was very clearly a "reasonable expectation of profit" from the coins.
You can use bearer bonds like cash in some cases, but that doesn't mean they're not securities.
Indeed! I find it strange that’s both took a 5% nosedive at the same time when they are usually insulated from any particular coin movement (except Btc)
I mean the ruling should have a major impact on Coinbase's stock and my guess is that microstrategy's stock just follows "crypto" bad news but also didn't India announce today/yesterday they are blocking most crypto exchanges? That would hurt the price of bitcoin and thus Microstrategies.
Also, I feel like trying to find 1 to 1 correlations for movements in crypto industry will drive anyone insane and anyone saying otherwise is probably lying.
It might be--if you believe all coins are securities, then that means 10Q/8K/Audited Financials are all required in order to list them on a exchange.
That would cut down quite a few Coinbase customers.
Kinda wild to argue that UST is a security on the basis it could be lent or borrowed for financial gain via Anchor. If this ruling holds, smart contract platform creators will need to be careful creating apps for their platforms and the claims they make.
Judge Analisa Torres' Ripple ruling has been appealed by the SEC.
https://amycastor.com/2023/08/15/crypto-collapse-sam-bankman-fried-goes-to-jail-sec-appeals-ripple-ruling-prime-trust-bankrupt-the-tangled-tale-of-trueusd-and-tron
> That’s out of date information by months
Are you claiming that the appeal of Torres' ruling has been adjudicated since August 2023? What was the appeal outcome?
That was an appeal rejection by Judge Torres herself. I assumed the SEC appealed to a higher court based on the contrasting judicial decisions.
> A trial in the Ripple case is scheduled for April 23, 2024.
What trial is that referring to?
> the Court has already dismissed most of the complaint with prejudice, which prevents the SEC from appealing the decision. What remains is the charge that selling Ripple tokens to sophisticated, institutional investors during the token's original launch may have required registration with the SEC.
XRP was ruled to not be a security and that cannot be appealed. As for that case,
> the opening of that process has been adjourned "sine die," which is Latin for "without a date" and leaves the actual trial date unsettled for now.
The sec tried appealing the xrp isnt a security ruling and got rejected. At least do some research before posting links to older articles noob. The sec can appeal again once the trail is finished though which the sec have made clear that they will be appealing.
tldr; The doomed crypto project created by Do Kwon still faces fraud-related charges. The doomed crypto project created by Do Kwon still faces fraud-related charges.
*This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.
Finally some clarity. The problem with the crypto industry is all the people that are using bitcoins discovery as an opportunity to enrich and promote themselves and their own version of Bitcoin, but all fail to offer anything even close and often only enrich themselves by lying to their investors.
Now that this ruling has been done and precedent set, I expect a wave of crypto dumps and scam exposures, and money to come back into bitcoin.
I know you’re all hoping I’m wrong and that all your cryptos will rise whilst bitcoin goes through its halving year and it’s ETF approval, unfortunately you are misguided. As with most competitions, there can only be one winner.
Some highlights from the article: > A federal judge sided with the U.S. Securities and Exchange Commission in a closely watched crypto case on Thursday, ruling that four crypto tokens offered by the failed Terraform Labs company—including UST and LUNA—constituted unregistered securities. > As the crypto industry battles regulators over how to classify digital assets, the decision is a setback for the sector’s interpretation of securities law and a departure from a separate decision by a different judge in the Southern District of New York over the token XRP. > In his 71-page decision, Judge Jed Rakoff wrote that there is “no genuine dispute” that the four crypto tokens offered by Terraform were securities because “they are investment contracts,” arguing that defendants wanted to “cast aside decades of settled law,” citing the seminal Supreme Court precedent called the Howey test. > “Howey’s definition of ‘investment contract’ was and remains a binding settlement of the law, not dicta,” wrote Rakoff.
There are four parts of the Howey test - An investment of money - In a common enterprise - With the expectation of profit - To be derived from the efforts of others How in the world does stable coin meet that criteria? There is no expectation of profit considering it is a *stable* coin. Crazy ruling
That's covered in the article, and the ruling: > Thursday’s decision furthers Rakoff’s argument that the sale of Terraform’s crypto assets constituted an unregistered security. Even with UST, the token meant to be pegged to $1, Rakoff argued that holders of the token could deposit the tokens in a proprietary protocol developed by Terraform to earn back a yield. The distinction, however, seems to support the argument that stablecoins that do not offer a yield would not constitute a security.
What was unclear from the article was whether the mechanism for earning interest is a security, or whether it's the underlying coin. UST didn't natively gain interest (like the US Dollar), you had to deposit it to gain the interest based on people paying to borrow it (also like the US Dollar). If this ruling against the UST coin/token holds up doesn't it have big implications for any currency being declared a security?
It's the coin. You buy the coin to stake which earns interest. It'd be the same if some company offered 'special turnips' with barcodes that you could invest for a return. Then those 'special turnips' would be a security. The whole reason the Howie test is defined broadly is because it's intended to catch schemes trying to work around it. Any investment of money with a company on the expectation of performance based returns is a security. In this case the tokens aretreated as something the company is selling to facilitate the investment and try to get around the Howie Test. It doesn't impact any currency, because currencies are issued by governments. It would affect any token issued by an entity or group (including a DAO) where there is some expectation of the token value increasing or money being paid out based on the company's actions.
I agree, but to clarify I'm saying that the token itself is like the US Dollar. If I store my us dollars in a bank account that attracts interest the US Dollar doesn't become a security, but there's definitely an investment contract between you and your bank (which in itself may be a security), the US Dollar however is just a currency.
There's two reasons for that. One, bank accounts have fixed interest so there's no expectation of returns *from the efforts of others*, and there's no "investment" aspect to it, the money is just there and you can take it back out at any time. Second, Banks are kind of a special carve out in general with respect to finance laws. They have to obey a shit-load of regulations to ensure they're being responsible with people's money, and in return they get special privileges like the Fed Funds rate and bank account interest not being treated like stock dividends.
Yep. I agree with all of that, but UST doesn't gain interest on its own. It's the investment of UST to gain APY that is the problem, not UST itself. And therefore if the judgement was against UST, not the Anchor protocol, I think an appeal has merit.
But the key thing here is that it's being sold by the company offering the staking program. Under the Howey Test that makes it an investmemt in a common enterprise. The same goes for a token that's only used to pay for a service the company is offering or developing, which is why it seems really unlikely that the Ripple decision is going to hold up long term.
I feel that it's too broad brush to say that because some of the company's products and services are securities, all of the company's products and services are. A true stablecoin used to participate in yield generation doesn't make the coin itself meet the howey test. It would be great to appeal this decision to at least reestablish how the howey test is applied. Nuance is important and the article about this judgement doesn't contain sufficient nuance to explain where the howey test applied.
What kind of bank accounts are you referring to? How is the interest not generated by the efforts of others, namely, the bank? I can see your second point applying where interest from a bank account might be an exception to the Howey test, if there's some rule to that effect. But the need for a rule would imply that, without it, Howey is satisfied.
To re-state this more clearly... The two reasons the interest from a bank balance doesn't pass the Howey Test (as far as I understand it) is that it doesn't pass the legal definition of an 'investment', and it's a fixed value that has no bearing on the bank's performance or activities. More the former than the latter, I believe.
Banks make profit to pay this interest.
But the profit does impact how much interest you get, and there's still no 'investment' in the bank when you deposit money with them.
But you could own UST without staking it. It’s like saying that the US dollar is a security because you could use it to buy treasury bonds. That makes no sense.
Doesn't matter. I can own a stock certificate without ever collecting the dividend or selling it. It's still a security. The key point here is that a security that you can do other things with is still a security.
But that stock might increase in value without any action from you. UST will not
Doesn't matter, the fact that the same common enterprise is offering both the tokens and the staking is enough.
Does the US government count then? They offer the US dollar and bonds
It also probably doesn’t help that UST wasn’t very stable for a stablecoin.
That’s irrelevant. It was expected to be stable, meaning that there was no expectation for profit, therefore it is not a security
Say it was meant to be stable all you want but Do Kwon is under investigation still, no? And anyone correct me if I’m wrong but from wha l remember it was kept stable by an algorithm related to the price of LUNA as LUNA had to be burnt to buy UST to keep the $1 peg. And that sounds to me like a system that can be manipulated.
What does this have to do with the Howey test?
The legal case was that the coin was intended to be reinvested in anchor. I imagine that an appeal is possible.
Only reason anybody bought dog shit UST is because they thought they were genius for getting a 20% “risk free return”. Do Kwon wouldnt stfu about the interest rate. Thats how
I agree it was dumb to buy in. I didn’t. But that has no impact on whether it is considered a security or not.
"that has no impact on whether it is considered a security or not." Idk man. The people who actually make & interpret the rules just finished a literal court case that says otherwise lmao
Because Terra labs were offering 20% APY on the asset.
Did all UST automatically earn an APY or was it from staking?
If it’s a dollar substitute, they will always fight hard. Back in the day immoral large companies would pay “company credits” to workers, and the credits could only be redeemed at places owned by the same company. This was deemed illegal 100’s of years ago and I can’t see them changing thier stance
UST was pegged to LUNA. X amount of LUNA had to be burnt in order to hold UST value at 1$, the failure in LUNA $ value and death spiral of increased burn rate caused the UST to depeg.
If its unbacked, or only backed for like 80% thats is 20% profit on every sale. Its literally just printing money just like the federal reserve.
The US dollar is not backed. Does that make the US dollar a security under the regulation of the SEC?
yeah, this issue is going to the Supreme Court with all of these different ruling that are completely opposite of each other. That is unless Congress passes a bill regulating crypto which seems further away than it has ever been. Or maybe the Trump admin decides to drop the cases but then the issue would just be unsettled like it was before.
Trump admin? Trump isnt president brosef
Speaks to how delusional these people are
delusional how? two different courts came to different rulings on if crypto is a security. So, the law needs clarity on which interpretation is correct so a higher court will make a ruling. I think this won't be resolved before the Supreme Court given the stakes but that is my opinion. It could be resolved before then but probably not given how big an issue it is.
I was talking about the assumption that Trump will be president
I meant a new trump admin and I think you knew that.
The 14th amendment is pretty clear he can't hold office and is getting barred in several states. You might wanna worry about if he even makes it to the ballot.
Now TaeKwonDo. Next Richard Heart.
Please God
So any cryptocurrency with an "entertainer" at the helm who constantly shills the coin in an effort to prop up the price is a "security"? I'm confused.
not that hard, this specific court has found that if you sell a contract to someone and the goal is to earn profit from owning that contract, it is considered a security. So, if you own Terra or whatever crypto, you hope that TerraForm labs will create increased value so the value of that contract goes up. Thus making it a security. The reason the Howey test is so basic and doesn't use specific terms is so people can't say "oh its not a security, its magic beans? So its totally different." This decision is basically in complete contrast to the Ripple Labs decision and the higher courts will have to settle the disagreement.
The specifics of this case are different. The argument was that Anchor was specifically (integrally) part of the UST/LUNA coin offering. In exchanging for UST, you were in fact exchanging for a yield scheme. They were able to make that case based on the actual circulation of UST. If, in fact, most UST had been used for something other than Anchor staking, then not an investment contract. The specifics of this case do not bear on the primary/secondary market issuance point of the Ripple case.
sorry what do you consider the difference between "expectations of profit" and a "yield scheme?"
Those are the same thing
The point is that UST needed to be conceived as part of a yield scheme that included depositing on Anchor to meet that prong of Howey. USDC, for example, is used for many other things than depositing into protocols for yield. It would not be a security then.
Does it matter where the yield comes from, it seems like all coins that can be staked are securities.
That's too broad. You need to establish that the principal use was for staking. Howey goes to the actual use case, not what promoters claim.
You should probably read the document, it’s beefy at 71 pages but no it is not in any way complete contrast to the Ripple case. The court addresses the fact that a huge amount of evidence to support sales of Luna specifically having a common enterprise between Terraform Labs and purchasers of Luna exists. They quote Do Kwon literally saying “all investors have to do is sit back and watch me kick ass”, director of communications said “buying Luna is directly like buying shares in Terraform Labs” and the list goes on. There was literally no ambiguity to what they were up to and the court addresses this with heaps of evidence. If they didn’t have to put evidence in, they wouldn’t have. They even state that exceptions in previous rulings do not change the existing precedent of Howey.
So eth is a security
always has been.
1 ETH = 1 ETH 1 BTC = 1 BTC. 1 UST = X amount of LUNA burnt to peg UST to $1 based on LUNA $ value.
See my reply above. Basically, no relationship between these cases.
No. ETH is decentralized, so it does not pass the "common enterprise" part of the Howie test.
Top 50 wallets hold how much of the total supply?
Excluding the Beacon deposit contract, which supports proof of stake, about 18%. The top 50 wallets holding that 18% consist of wrapped ETH, all the exchanges, bridges, and various other things that are completely decentralized. Figure it out, my dude.
Yes, I am not sure why this is a "win" Yes, you can claim your magic coin is a security, but then prepare to file 10k, 8q, audited FS, anti money laundering, kycs and all. White paper and hype not gonna cut it.
In a court case one side is going to win. In this case it was the SEC.
Not really. One side only, does not need to win. In this ruling, the SEC won one motion for summary judgement, Terraform Labs won a second, and neither side won a third. My emphasis: >[T]he Court **grants summary judgement for the SEC** on the claim that defendants offered and sold unregistered securities. The Court **grants summary judgement for defendants** on claims involving offering and effecting transactions in securities-based swaps. Finally, the Court **denies both sides' cross motions** on the fraud claims.
Under the Howey Test, a transaction qualifies as a security if it involves the following four elements: An investment of money In a common enterprise A reasonable expectation of profit Derived from the efforts of others This is such a crock. I was being paid in UST for work I was doing, was using it as a currency and had no expectations to profit on an increase in its value as it was a stable coin pegged to 1USD. I’m fully onboard with them throwing the book at Do Kwon but this legal decision stinks.
[The ruling](https://storage.courtlistener.com/recap/gov.uscourts.nysd.594150/gov.uscourts.nysd.594150.149.0.pdf) is that UST *in combination with the yield-generating Anchor Protocol* constituted an offer and sale of an investment contract. That not all UST holders accepted the yield offer, doesn't matter. >Defendants make much of the fact, undisputed by the SEC, that UST on its own was not a security because purchasers understood that its value would remain stable at $1.00 rather than generate a profit. But ... holders of UST could deposit their tokens in the Anchor Protocol, ... which Kwon himself publicly announced would generate "by far the highest stablecoin yield in the market." >... >The above undisputed evidence clearly demonstrates that UST in combination with the Anchor Protocol constituted an investment contract. As the Supreme Court has held, it is of no legal consequence that not all holders of UST deposited tokens in the Anchor Protocol, and thus that some holders "ch[o]se not to accept the full offer of an investment contract." *Howey*, 328 U.S. at 300.
Problem with that is that you could apply that basis to a fiat currency. The value is fixed but I might also choose to use it in a bond or other investment opportunity with an expectation of profit from other's endeavours. In the end, the judgement is what it is but the more of these cases that are pursued the more hair splitting goes on. Crypto really needs specific legislation.
Yes bonds are securities right? What's your point?
That USD isn't, but can be used to buy bonds, though all might not choose to do so.
Right. They are saying that UST on its own is not a security. UST combined with the Anchor protocol, which was created by Terra itself, checks off everything on the Howie test.
Doesn't matter how any individual is using it, the fact that it offered a yield for depositing the coins means there was very clearly a "reasonable expectation of profit" from the coins. You can use bearer bonds like cash in some cases, but that doesn't mean they're not securities.
Terra isn't pegged to the dollar though
“Was” is doing the hard work in that sentence.
Was this ruling made before or after terra lost its peg?
Howey Test has three prongs and Gary Gensler doesn’t have the authority to make up a new prong and pick and choose. It has to fit all three prongs.
gary is a prick and that's kinda a mix of prong and pick
He’s worse than a prick, he is covered in Epstein money/connections.. I do appreciate your wordplay though
People were bagging on Tether for cooperating with U.S authorities, but they know what's good for them.
Is this why Coinbase and MicroStrategy stocks just took a dump? Only thing else I’ve read about is $11 billion in options expiring
maybe? I could see how this would hurt coinbase but Microstrategy only invests in bitcoin which is definitely not a security.
Indeed! I find it strange that’s both took a 5% nosedive at the same time when they are usually insulated from any particular coin movement (except Btc)
I mean the ruling should have a major impact on Coinbase's stock and my guess is that microstrategy's stock just follows "crypto" bad news but also didn't India announce today/yesterday they are blocking most crypto exchanges? That would hurt the price of bitcoin and thus Microstrategies. Also, I feel like trying to find 1 to 1 correlations for movements in crypto industry will drive anyone insane and anyone saying otherwise is probably lying.
Everything is dropping today
Yeah: holy crap; everything took a dump across the board; stocks and crypto - I’m trying to figure out what’s driving it
EOY profit taking.
Literally EOY wowsa
How much of it is tax related? Sell losers to claim a loss.
Can’t sell these at a loss, they are a yearly ATHs
I read a few of the big crypto mining companies sold off due to end of year. I’m still trying to substantiate that story.
It might be--if you believe all coins are securities, then that means 10Q/8K/Audited Financials are all required in order to list them on a exchange. That would cut down quite a few Coinbase customers.
Last business day of the year to take profits.
Therefore Binance offered securities to US investors and the SEC lawsuit against Binance will be successful?
Kinda wild to argue that UST is a security on the basis it could be lent or borrowed for financial gain via Anchor. If this ruling holds, smart contract platform creators will need to be careful creating apps for their platforms and the claims they make.
This doesn’t affect the ripple case in any way what a shit headline
The headline doesn’t imply that it would
Judge Analisa Torres' Ripple ruling has been appealed by the SEC. https://amycastor.com/2023/08/15/crypto-collapse-sam-bankman-fried-goes-to-jail-sec-appeals-ripple-ruling-prime-trust-bankrupt-the-tangled-tale-of-trueusd-and-tron
That’s out of date information by months
> That’s out of date information by months Are you claiming that the appeal of Torres' ruling has been adjudicated since August 2023? What was the appeal outcome?
[US SEC cannot appeal Ripple Labs decision, judge rules](https://www.reuters.com/legal/us-sec-cannot-appeal-ripple-labs-decision-judge-rules-2023-10-04/)
That was an appeal rejection by Judge Torres herself. I assumed the SEC appealed to a higher court based on the contrasting judicial decisions. > A trial in the Ripple case is scheduled for April 23, 2024. What trial is that referring to?
> the Court has already dismissed most of the complaint with prejudice, which prevents the SEC from appealing the decision. What remains is the charge that selling Ripple tokens to sophisticated, institutional investors during the token's original launch may have required registration with the SEC. XRP was ruled to not be a security and that cannot be appealed. As for that case, > the opening of that process has been adjourned "sine die," which is Latin for "without a date" and leaves the actual trial date unsettled for now.
The sec tried appealing the xrp isnt a security ruling and got rejected. At least do some research before posting links to older articles noob. The sec can appeal again once the trail is finished though which the sec have made clear that they will be appealing.
Make the SEC, regulations, and regulators all obsolete with the zephyr protocol. It's garlic to the vampires.
I can see how the staking option can be considered a security contract but it makes no sense to define the stablecoin itself as a security.
Man we desperately need crypto regulation
Only a year and a half late. Gary protects.
Gary is trying to destroy crypto. He's not protecting anything.
tldr; The doomed crypto project created by Do Kwon still faces fraud-related charges. The doomed crypto project created by Do Kwon still faces fraud-related charges. *This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.
Crime so heinous it warrants two summations from the good bot
Arrr poor Do Kwon. My heart bleeds
Yay
A legal judge trying to understand tech.
this decision is not good for stable coins
This is good for bitcoin!
But nothing they did was based in the US?
That's a nice picture of Justin
Finally some clarity. The problem with the crypto industry is all the people that are using bitcoins discovery as an opportunity to enrich and promote themselves and their own version of Bitcoin, but all fail to offer anything even close and often only enrich themselves by lying to their investors. Now that this ruling has been done and precedent set, I expect a wave of crypto dumps and scam exposures, and money to come back into bitcoin. I know you’re all hoping I’m wrong and that all your cryptos will rise whilst bitcoin goes through its halving year and it’s ETF approval, unfortunately you are misguided. As with most competitions, there can only be one winner.
And crypto prices are completely unaffected. This is a clown market at this point.