U.S. SEC Walks Back ‘Crypto Asset Securities’ Claim in Amended Binance Complaint

• The SEC retracted its “crypto asset securities” label, signaling a shift in its regulatory stance toward digital assets.
• Despite the retraction, the SEC continues to target specific cryptocurrencies, including Cosmos Hub, Axie Infinity, and Filecoin.
• Legal experts criticized the SEC’s inconsistent approach, highlighting concerns about its broader regulatory strategy.

In a surprising move, the U.S. Securities and Exchange Commission (SEC) has retracted its controversial “crypto asset securities” label in its lawsuit against Binance. This development marks a significant shift in the agency’s stance, as the term had been central to multiple enforcement actions against digital asset operators, including major exchanges like Binance and Coinbase.

SEC Admits Error in Crypto Labeling

The SEC’s revised complaint, submitted in court on September 12, which was the date of the commencement of this action, accepts the fact that “crypto asset securities” do not refer to assets properly. In line with the said filing, the SEC was sorry for the contradictions posed by the term and apologized for using it in that manner.

Changes in Legal Strategy

This retraction represents a departure from the SEC’s earlier aggressive posture, where it had labeled specific cryptocurrencies as unregistered securities. Notably, the SEC included three additional tokens Cosmos Hub, Axie Infinity, and Filecoin in its latest complaint as unregistered securities, despite its broader retreat from the “crypto asset securities” label.

For a long time, the cryptocurrency domain has argued with the SEC over the classification of digital assets as securities stating that no such class of assets exists. In particular, legal experts from the industry, Coinbase’s Chief Legal Officer Paul Grewal, and Ripple’s Legal Officer Stuart Alderoty have equally slammed the SEC’s approach. Alderoty noted that the SEC’s statement explains why it is unable to regulate the industry, describing it as a pretzel of contradictions.

On the other hand, SEC continued to be aggressive.

However, there has not been a reduction in the SEC’s enforcement actions. The case’s amended complaint addressing Binance is for example a typical anti-crypto witch hunt as the SEC recently engaged in with eToro which made the company close down the bulk of its crypto trading activities. At the same time, SEC official Gary Gensler and other staff members are under scrutiny as to their alleged unprofessionalism in political appointments, which is one of the rising issues facing the agency.