1/25

SEC Hinman email release summary:

-Not a big impact to the $XRP case.
-Decently positive for $ETH.
-Nuance puts Gensler in a corner.

Let's recap the Hinman speech and I'll explain why this is damning for Gensler's position! pic.twitter.com/Ca4ljiJYZr

— Adam Cochran (adamscochran.eth) (@adamscochran) June 13, 2023

3/25

Hinman's guidance in his speech certainly went beyond the scope of Howey by attempting to understand the nuanced intent of users vs investors – as well as trying to ask the question of 'morphing' this concept of can something be a security and then later not a security.

— Adam Cochran (adamscochran.eth) (@adamscochran) June 13, 2023

4/25

(Which caveat, I think we can derive from Howey itself but that's another thread)

But, Hinman was so focused on this idea of "morphing" that he wanted that to be the initial name of the speech. pic.twitter.com/Ctq0Z7REz0

— Adam Cochran (adamscochran.eth) (@adamscochran) June 13, 2023

7/25

Then Hinman points out something Gensler has seemingly forgotten:

"In Howey, orange groves did not become a security, even though the sale of the future profits of those were" pic.twitter.com/gkrG6witBV

— Adam Cochran (adamscochran.eth) (@adamscochran) June 13, 2023

9/25

Then we have the draft Ethereum piece, where after meeting with Vitalik and his lawyers, Hinman held the view that Ethereum was not at such a time a security.

And that secondary sales didn't raise Securities Act concerns – only Exchange Act and Commodities Act concerns. pic.twitter.com/AF19h4p47N

— Adam Cochran (adamscochran.eth) (@adamscochran) June 13, 2023

11/25

Another interesting point from the SEC notes was actually the more challenging analysis related to BTC.

While they didn't want to call BTC a security – a large part of their analysis on why ETH isn't a security was its practical use as gas, which BTC lacked. pic.twitter.com/cqU0bZknaF

— Adam Cochran (adamscochran.eth) (@adamscochran) June 13, 2023

13/25

Hinman highlights that something having utility doesn't make the sale of it not a security.

But once again, highlights the non-transitive property of an investment contract.

The presence of an IC does not make the underlying commodity the security – only its sale. pic.twitter.com/md44wRPeKk

— Adam Cochran (adamscochran.eth) (@adamscochran) June 13, 2023

15/25

Hinman asks "did the group retain a stake they expect to go up in value" and the SEC staff bluntly asked "how would this apply?"

Pointing to the fact that this isn't really relevant in Howey analysis. pic.twitter.com/SCHzbqNWmn

— Adam Cochran (adamscochran.eth) (@adamscochran) June 13, 2023

17/25

Finally the SEC staff point out that it is not the existence of a secondary market, but the efforts of the promoter to promote that secondary market that matter in secondary sale analysis: pic.twitter.com/15ayRKI0Lc

— Adam Cochran (adamscochran.eth) (@adamscochran) June 13, 2023

19/25

The SEC knows that the "morphing" argument has some quasi-valid grounds because of the non-transitive property of an IC to the underlying asset, so something *could* start as a security and become not one.

Gary hates that.

— Adam Cochran (adamscochran.eth) (@adamscochran) June 13, 2023

21/25

Even worse, they are doing that upon secondary sales, as the Ethereum Foundation is no longer selling Ethereum to you directly in an offering – and is not the fundamental developer of Ethereum.

— Adam Cochran (adamscochran.eth) (@adamscochran) June 13, 2023

23/25

For Gary to conclude that proof-of-stake Ethereum is a security, he would both need to fight a landslide of precedent on the most litigated part of Howey analysis – and admit to the idea that securities status can change over time with decentralization.

— Adam Cochran (adamscochran.eth) (@adamscochran) June 13, 2023

25/25

So which is it Chairman:

-Can securities status morph over time with decentralization?

or

-Is securities analysis immutable with commonality only bound by the primary sale or the *promotion* of the secondary sale? pic.twitter.com/osdbIRZOFk

— Adam Cochran (adamscochran.eth) (@adamscochran) June 13, 2023

In the past 24 hours, more than $350M has been liquidated due to the dump in Altcoins.

The whole #crypto market is taking a bloodbath!🩸

This is happening because The SEC has sued major exchanges for trading securities.

This thread contains A to Z about security tokens:🧵 pic.twitter.com/kubFb1Je3J

— EvanLuthra.eth (@EvanLuthra) June 10, 2023

What are Security Tokens?🤔

They're digital assets tied to tradeable external assets.

They must follow federal regulations or face penalties.

Like bonds & equities, they can represent ownership in assets or earnings.

They are issued by STS.

— EvanLuthra.eth (@EvanLuthra) June 10, 2023

How do security tokens work?👇

Security tokens are blockchain-based investments.

Token holders get dividends and company ownership.

They pass the Howey Test, meaning they're subject to federal regulations as they derive value from tradeable assets. pic.twitter.com/HL9E2TCWml

— EvanLuthra.eth (@EvanLuthra) June 10, 2023

Difference between Security Tokens & Utility Tokens👇 pic.twitter.com/duRWGwwd1K

— EvanLuthra.eth (@EvanLuthra) June 10, 2023

The SEC named 19 cryptos as securities in lawsuits against Binance and Coinbase.

In the lawsuit against Binance, the SEC identified the following tokens as securities:

̐• $ATOM
• $BNB
• $BUSD
• $COTI

— EvanLuthra.eth (@EvanLuthra) June 10, 2023

In the case against Coinbase, the SEC classified these cryptos as securities:

• $CHZ
• $NEAR
• $FLOW
̐• $ICP
• $VGX
• $DASH
• $NEXO

— EvanLuthra.eth (@EvanLuthra) June 10, 2023

These tokens on both Binance and Coinbase were also tagged as securities by the SEC:

• $SOL
• $ADA
• $MATIC
• $FIL
• $SAND
• $MANA
• $ALGO
• $AXS

Surprisingly, $ETH is excluded from their list.🧐

— EvanLuthra.eth (@EvanLuthra) June 10, 2023

The #Binance and #Coinbase lawsuits are pivotal for crypto, potentially shaping future laws ⚖️.

The crypto market 📊 awaits the outcomes, calling 📞 for clear rules 📝 to balance investor protection 🛡️ and innovation 💡.

— EvanLuthra.eth (@EvanLuthra) June 10, 2023

Also recently, the Golden/Bid metric has dropped by 20%

This indicates that most of the whales have removed buy bids.

Making bearish sentiments in the market.

Anyways, remember, FUDS are temporary but crypto is forever. pic.twitter.com/FBU1noE7AH

— EvanLuthra.eth (@EvanLuthra) June 10, 2023

That's a wrap!

Stay tuned for more threads on the blockchain, cryptocurrencies, and other exciting innovations in the space.🔥

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1. Follow me @EvanLuthra for more of these
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— EvanLuthra.eth (@EvanLuthra) June 10, 2023