In a major development, yesterday a federal judge authorized the current management of FTX to begin selling the exchange’s holdings of digital currencies, specifically XRP and Solana (SOL). These cryptocurrencies have long been under scrutiny from the U.S. Securities and Exchange Commission (SEC) due to accusations that they are unregistered securities.
In response to the ruling, Jeremy Hogan, a lawyer known for his support of XRP, took to social media to state that authorized sales of cryptocurrencies are not legally required to register with the SEC. He argues that the judge’s ruling effectively defines XRP, SOL and similar assets as not being securities, at least not in this particular case.
Former SEC official and securities law expert Marc Fagel gave his opinion on the matter, outlining the intricacies of the situation. He explained that FTX, not being the issuer of these tokens, likely qualifies for an exemption from SEC registration. Fagel also pointed out the potential complexity of the situation if FTX were to sell its own tokens, which could lead to a more complicated legal scenario. Questions about the exchange’s own token, FTT, also led Fagel to suggest that its sale could raise more complex legal issues.
Future sales would be similarly exempt, so I’m not sure I follow your reasoning. The only complication comes with exchanges—is a particular token a security for purposes of requiring the exchange to be registered? That’s what the Coinbase/Binance cases may resolve.
— Marc Fagel (@Marc_Fagel) September 14, 2023
The discussion went on to whether the same exemptions would apply to future sales of these tokens on secondary markets. Fagel expressed confidence that future token sales would likely not be subject to SEC registration requirements. The expert emphasized that the main issue may be whether particular tokens qualify as securities, which could affect registration on exchanges, an issue that current cases involving major exchanges such as Coinbase and Binance are designed to resolve.
