Legal Alerts/Details

Enforcement Action by the SEC Heightens Regulatory Uncertainty Surrounding Crypto Assets

August 01, 2022
  1. SEC v. Wahi, No. 2:22-cv-01009 (W.D.Wash. Jul. 21, 2022).
  2. See SEC v. Ripple Labs, Inc., No. 1:20-cv-10832, Dkt. No. 441 at 13 (S.D.N.Y. Mar. 11, 2022).
  3. United States v. Wahi, No. 22-cr-392 (S.D.N.Y. Jul. 21, 2022).
  4. Supra note 2.
  5. SEC v. W.J. Howey Co., 328 U.S. 293, 298-99 (1946).  Noticeably, the SEC does not present any argument as to the security status of the other tokens traded by the defendants.
  6. Section 2(a)(1) of the Securities Act of 1933, 15 U.S.C. § 77b(a)(1); Section 3(a)(10) of the Exchange Act, 15 U.S.C. § 78c(a)(10).
  7. Supra note 1, at 89.
  8. Id, at 91.
  9. Id at 92.
  18. The SEC has subsequently brought an action against multiple defendants for perpetrating an alleged Ponzi scheme utilizing smart contracts that operated on the Ethereum, Tron, and Bfinance blockchains.  The complaint alleges that the smart contracts constitute “securities” as they represent an “investment of money…in a common enterprise from which they were led to expect profits solely from the efforts of Defendants or third parties.” See SEC v. Okhoynikov et al., No. 1:22-cv-03978 (N.D.Ill. Aug. 1, 2022) at 9.
  19. The only exception here would be Bitcoin and Ether, which the SEC have stated are not securities – see William Hinman, Dir., Div. of Corp. Fin., Sec. & Exch. Comm’n, Digital Assets Transactions: When Howey Met Gary (Plastic), (June 14, 2018), available at

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