SEC Complaint Reveals the Truth: Major Players Have Stumbled in the Crypto World in Recent Years

SEC Complaint: Major Crypto Players Stumble in Recent Years

The US Securities and Exchange Commission (SEC)’s lawsuit against two major cryptocurrency exchanges, Binance and Coinbase, this week has shaken the entire cryptocurrency industry, exposing the fact that numerous industry giants, from Wall Street and Silicon Valley to entertainment, fashion, and even top global football clubs, have been bending over backwards for the cryptocurrency industry in recent years, with many participating in cryptocurrency financing or collaborations that have been accused of violating securities laws by the SEC.

Here are some well-known cryptocurrency projects or collaborations that have been specifically mentioned in SEC lawsuits, either involving unregistered securities financing violations or securities issuances by project participants that violate securities laws.

A recent example occurred on April 7th of this year when NEAR Foundation, the developer of the NEAR blockchain, announced that one of its most creative NEAR Balkans Hub projects, Tekuno, recently partnered with Mastercard to provide a unique real-world non-fungible token (NFT) experience.

The SEC’s lawsuit alleges that the NEAR blockchain protocol’s native token, NEAR, is an unregistered security.

Two projects from last year were involved, one of which was on March 16th when HSBC and the blockchain-based decentralized virtual game The Sandbox announced a collaboration, becoming the first global financial services institution to enter The Sandbox metaverse. HSBC purchased a virtual plot of land, LAND, in The Sandbox metaverse and developed it, interacting with sports, esports, and gaming enthusiasts to establish good relationships.

The SEC’s lawsuit shows that the digital token SAND issued by The Sandbox platform is an unregistered security.

On November 1st of last year, Protocol Labs, Filecoin Foundation, one of the “Big Four” accounting firms, Ernst & Young, and other founding members announced the launch of the Decentralized Storage Alliance, a decentralized storage alliance.

The statement at the time said that Ernst & Young is committed to public blockchain, focusing on making the necessary tools, systems, and services available to help public sector and private enterprise leverage blockchain technology to address the ecosystem’s most pressing issues, including privacy, security, and regulatory compliance. Ernst & Young has the ability to test and audit transactions in a blockchain environment, giving businesses confidence to move from simply tracing on the blockchain to trading throughout the entire lifecycle of the enterprise.

The native encrypted assets FIL of Filecoin, one of the founding members of the above-mentioned alliance, belong to unregistered securities.

On April 30, 2021, Dapper Labs, the developer of Flow blockchain, announced that it had raised $250 million in new funding led by hedge fund Coatue, and introduced that in addition to Coatue, Dapper Labs’ notable investors include Silicon Valley’s top venture capital firm Andreessen Horowitz (a16z), Union Square Ventures, Venrock, BOND, sovereign wealth fund Singapore Government Investment Corporation (GIC), Google Ventures (GV), Samsung, Dreamworks’ founder, Reddit, Coinbase, Zynga, AngelList, etc.

SEC stated that the native token of the FLOW blockchain, FLOW, is an unregistered security.

On May 18, 2021, Sygnum Bank announced that it became the first bank to offer custody and banking services for Internet Computer blockchain’s utility token.

SEC pointed out that the native token of the Internet Computer protocol blockchain, ICP, is an unregistered security.

On June 9, 2021, Solana Labs, the developer of Solana blockchain, completed a $314.15 million private token sale, led by Andreessen Horowitz (a16z) and cryptocurrency-focused venture capital Polychain Capital.

SEC, when accusing the exchange, pointed out that the token of Solana blockchain, SOL, is an unregistered security.

On October 26, 2021, Samsung invested in the blockchain game unicorn Axie Infinity. SEC stated that the native token of the game, AXS, is an unregistered security.

A relatively long time ago, on February 20, 2020, the Spanish football giant Barcelona Football Club (Barça) announced that it had reached a global cooperation agreement with blockchain-based sports and entertainment fan interaction platform Chiliz, allowing fans and Barça to interact in an innovative way through Chiliz’s fan voting and reward platform, where fans can participate in a variety of surveys and votes related to Barça’s daily activities using digital assets called Barça Fan Tokens.

SEC stated that the native token of the Chiliz blockchain, CHZ, is an unregistered security.

In addition, the SEC indictment pointed out that the native token of the Polygon blockchain, MATIC, is an unregistered security. Polygon blockchain has announced several collaborations in the past few years.

Among them, on October 18, 2021, Polygon announced a strategic blockchain agreement with sports betting company DraftKings, stating that online payment processing company Stripe will be the first to support payment using the USDC stablecoin pegged to the US dollar, and payment will be made through the Polygon network. The choice of this network is due to its low fees, fast speed, combination with the Ethereum blockchain, and compatibility with multiple wallets.

On January 20th of last year, Adidas and Prada collaborated with Polygon Studios to launch an NFT project on the Polygon network, featuring user-generated and self-created artwork.

On September 12th of last year, Starbucks announced the launch of a new Web3 technology-supported experience, Starbucks Odyssey, which will provide opportunities for Starbucks Reward members, partners, and employees in the United States to earn and purchase digital collectible assets. Starbucks stated that it will use Polygon-developed proof-of-stake (PoS) blockchain technology, which consumes less energy than first-generation PoS blockchains.

On November 10th of last year, Polygon announced a partnership with Disney to develop a concept validation for an exclusive digital collectible to confirm Disney employees’ identities on special occasions.

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