US Court Rules "Virtual Assets Are Securities"... Diverging from Ripple Lawsuit

The U.S. court has ruled that virtual assets are securities. Previously, there was a ruling that the classification of virtual assets as securities depends on the method of sale, so confusion is expected.

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According to the industry on the 2nd, Judge Jed Rakoff of the U.S. District Court for the Southern District of New York in Manhattan stated on the 31st of last month that virtual assets are securities and "refuses to distinguish securities status based on the method of sale."

On the 13th of last month, Judge Analisa Torres of the New York District Court ruled in a lawsuit regarding the securities status of the virtual asset Ripple that Ripple is a security when sold to institutional investors but not a security when sold to the general public.

However, Judge Rakoff said, "I reject the approach recently adopted by another judge in this district in a similar case," and viewed virtual assets as securities regardless of the method of sale.

This ruling came from a lawsuit filed by Terraform Labs and its founder Kwon Do-hyung against the U.S. Securities and Exchange Commission (SEC). In February, the SEC sued Terraform Labs and founder Kwon Do-hyung on charges of fraud through the offering and sale of unregistered securities related to the Terra collapse incident.

Kwon's side argued that Terra, a stablecoin designed to be pegged to fiat currency, is not a security, citing the New York federal court ruling on Ripple, and requested dismissal of the lawsuit. Judge Rakoff did not accept Kwon's argument and ruled that the lawsuit filed by the SEC could proceed.

This ruling is expected to strengthen the SEC's position, which views virtual assets as securities and argues that virtual asset exchanges must comply with federal securities laws. The SEC has filed lawsuits against Coinbase, the largest exchange in the U.S., for violations of securities laws. The SEC pointed out that Coinbase earned billions of dollars through handling virtual assets since at least 2019 but avoided disclosure obligations for investor protection.

Meanwhile, Brian Armstrong, CEO of Coinbase, claimed that the SEC demanded the delisting of all virtual assets except Bitcoin. The SEC responded by denying this, stating, "We do not request companies to delist virtual assets."

This content was produced with the assistance of AI translation services.