Several prominent cryptocurrency organizations have publicly refuted the Securities and Exchange Commission’s recent claims that Solana (SOL), Polygon (MATIC), and Cardano (ADA) are securities, along with a number of other tokens allegedly being offered and traded on non-compliant crypto exchanges, which were cited in the SEC’s lawsuits against Binance and oinbase">Coinbase last week.
Solana, Polygon, and Cardano, which are among the top 20 cryptocurrencies by market capitalization, have been hit hard in the past week, with each token experiencing a decline of approximately 30%, although they have since made a partial recovery as of Sunday, according to CoinGecko’s market data. Despite this, the combined market capitalization of these tokens remains significant, totaling over $21 billion, which is equivalent to approximately one-tenth of Ethereum’s total value.
Input Output Global (IOG), the blockchain research and engineering firm responsible for creating Cardano, was the first organization to defend the regulatory status of one of the top three altcoins. On June 6, IOG stated that Cardano’s token, ADA, has never been considered a security under U.S. securities law. IOG also emphasized that the SEC’s lawsuits would not have any impact on the company’s operations and expressed a willingness to work collaboratively with regulators to balance innovation and consumer protection. IOG further argued that the SEC’s latest filing highlights the need for greater clarity and certainty in regulation and that enforcement actions alone are insufficient in meeting the needs of both the blockchain industry and consumers.
The Solana Foundation, a Swiss-based non-profit organization devoted to Solana, expressed disagreement with the SEC’s labeling of Solana as a security on Saturday, but with less conviction than IOG. The foundation’s statement on Twitter did not assert that Solana is not a security but rather that it disagrees with the characterization of SOL as such. Like IOG, the Solana Foundation emphasized its willingness to collaborate with regulators and highlighted the importance of regulatory clarity for all digital asset stakeholders building in the United States.
Members of the Solana community are currently discussing the possibility of forking Solana, with some considering it a viable option for moving forward, similar to Ethereum’s decision after The DAO hack in 2016. The potential fork is also being debated as a way to avoid the potential impact of FTX’s bankruptcy, which could result in a significant number of Solana tokens owned by Alameda Research, the trading firm of former FTX CEO Sam Bankman-Fried, being released onto the open market over the next few years. According to HGE.ABC on Twitter, a community fork of Solana would address the SEC issue and prevent continuous dumping on the market for the next three years.
Polygon Labs, the company behind Ethereum’s scaling solution, responded on Twitter several hours after the Solana Foundation’s statement regarding the SEC’s position. However, Polygon Labs did not explicitly mention the SEC or assert that its token, MATIC, is not a security. Instead, the company attempted to distance MATIC from U.S. markets.
Polygon Labs responded to the SEC’s position on Twitter by emphasizing that Polygon was developed and deployed outside of the United States and highlighting the global community that supports the network. The company focused on the utility of MATIC, stating that the token was necessary to secure the Polygon network from launch. Furthermore, Polygon Labs claimed that it has conducted itself in a manner that did not target U.S.-based individuals, which could potentially serve as a legal argument over regulatory jurisdiction regarding MATIC. The company expressed confidence in its past actions and stated that MATIC was made available to a broad group of individuals but without any actions targeting the United States at any time.
Following the SEC’s regulatory actions against Binance and oinbase">Coinbase, Robinhood has announced that it will no longer support Solana, Polygon, and Cardano, citing the lawsuits that have created uncertainty around these cryptocurrencies. While other companies may also decide to withdraw support, the organizations behind each coin are making efforts to restore their currency’s reputation in the meantime.
