Analysts Doubt The SEC Doesn’t See Solana As a Security Despite Binance Lawsuit Climb Down, Say It’s Playing Politics, Lawfare

BySteven Walgenbach

Updated: 31 July 2024

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Analysts are skeptical that the US Securities and Exchange Commission (SEC) has let Solana off the hook after the regulator retracted its request for a court to classify tokens including SOL as securities.

“The explanation here is simple: Politics,” said General counsel and head of decentralization at a16z Crypto, Miles Jennings, in a July 30 X post. ”The SEC is opting to forego their unbounded legal theories in front of a skeptical judge (Jackson), but will still pursue those claims in front of a judge that’s inclined to agree with them (Failla).”

Jennings said such ”antics” are further evidence that the SEC’s enforcement actions are “about lawfare, not the rule of law.”

SEC Still Names SOL And Other Tokens As Securities In Coinbase Case

Jennings added that Judge Amy Berman Jackson setting a high bar to determine if the Howey test was satisfied in the Binance case may have prompted the regulator to decide it was not worth the effort to prove the tokens are securities.

The SEC is still referring to the same tokens as securities in other crypto exchange lawsuits, though, including the ongoing case with Coinbase.

Judge Katherine Polk Failla also seems more “inclined” to agree with the SEC’s argument in the Coinbase lawsuit, Jennings said.

No Confirmation That Solana Is A Non-Security

Justin Slaughter, the policy director at Paradigm, echoed a similar sentiment to that of Jennings in a July 30 post on X. He believes that several people are “overreading” the SEC’s recent filing. Slaughter went on to write that this development does not indicate the SEC will no longer consider Solana and other tokens as securities.

There is no reason to think SEC has decided SOL is a non-security.

That they don't want to do discovery on a dozen tokens in the Binance case appears to be a litigation tactic, not a change in policy.

Note the SEC still calls these tokens securities in the other exchange cases.

— Jake Chervinsky (@jchervinsky) July 30, 2024

Similarly, Variant Fund’s chief legal officer Jake Chervinsky wrote that there is no reason to conclude that the “SEC has decided SOL is a non-security.”

He believes that the SEC’s decision has something to do with the agency not wanting to do discovery “on a dozen tokens in the Binance case,” referring to the agency’s decision as a “litigation tactic.”