US SEC claims FTX token (FTT) was a security
A new complaint by the US Securities regulatory body raised questions over the nature of multiple tokens issued by Crypto Exchanges as a native tokens.
The United States Securities and Exchange Commission (SEC) is a leading financial regulatory body, which also regulates the crypto market under its existing traditional securities laws. Gary Gensler, chairman of the SEC agency, believes that the majority of the crypto assets are covered under Securities law and such cryptocurrencies are not different from traditional assets in terms of use case & nature.
On 21 Dec, The US SEC filed a complaint against FTX former officials who were the main culprit behind the FTX exchange fallout. In particular, SEC pointed out the issue associated with the exchange’s native token “FTX Token or say (FTT)” and claimed that the issued FTT token by the FTX exchange was a security, which was not registered under the Securities Act.
The Securities regulatory body noted that increasing crypto assets trading activities on the FTX exchange were directly increasing the demand for FTT & further, would increase the profit for the FTT holders.
Explanation stated:
“If demand for trading on the FTX platform increased, demand for the FTT token could increase, such that any price increase in FTT would benefit holders of FTT equally and in direct proportion to their FTT holdings.”
The filed complaint by the SEC agency particularly targeted two main things, which shows that FTT was a security nature class asset.
Sec noted that FTX’s Exchange was using FTT token sales for its business funding and secondly the company was doing everything to increase the price of FTT like burning FTT tokens, which was much similar to the stock buybacks in traditional markets.
Such things are now raising questions over the nature of Binance coin (BNB), OKX coin (OKB), and KuCoin’s KCS. These are popular crypto assets issued by crypto exchanges as a native tokens. In future, these coins may fall under the SEC’s legal action.
Read also: SEC boss Gary Gensler facing criticism & support over FTX fraud
