The US Securities and Exchange Commission (SEC) recently returned to claiming a number of cryptocurrencies as securities traded on Bittrex.
The cryptos targeted this time are OMG Network (OMG), Dash (DASH), Algoran (ALGO), Monolith (TKN), NAGA (NGC) and IHT Real Estate Property (IHT).
While many expected some of these tokens to be categorized as securities, DASH's inclusion was the most surprising of all.
For information, DASH is a proof of work token that does not have a pre-sale. Of course this raises questions about the SEC's rationale behind categorizing DASH as a security.
Responding to this, a crypto activist who is also an analyst named Kaleo said, the SEC claims that DASH is offered and sold as an investment contract which makes it a security.
While there was no pre-mining or initial coin offering (ICO), the SEC confirmed DASH's classification as a security through a public company to support the "Dash Control Group."
The Dash Control Group is a group of Masternodes that have chosen to fund improvements to the Dash platform and the DASH token. According to the SEC, that is what increases the value of DASH tokens thereby benefiting all token holders.
“The SEC's claim that DASH is a security could have significant implications for the crypto industry, as it raises questions about other asset classifications,” said Kaleo.
In particular, the SEC's intervention in public companies to support Dash Control Group could be seen as a warning to other cryptocurrencies that rely on similar structures to fund development and improvements.
“However, it should be noted that the SEC's arguments against DASH seem weak compared to Bitcoin, which lacks a percentage of mining rewards for all kinds of common companies like Dash Control Group,” he said.
Kaloe said the SEC's argument against DASH was based on the concept of the expectation of a reasonable profit based on the efforts of others. Since all of the wealth of token holders depends on the performance of Masternodes and Dash Control Group, the SEC believes that investors in DASH have a reasonable expectation of profit based on the efforts of others.
“The interpretation of the structure of DASH as a security highlights the importance of transparency and clear communication from the crypto's developers. Because, even structures that are meant to be decentralized and community-driven can be viewed as securities by regulators. Weak argument from the SEC,” concluded Kaleo.
The SEC recently cited OMG, DASH, ALGO, TKN, NGC, and IHT among others as securities traded on Bittrex.— K A L E O (@CryptoKaleo) April 17, 2023
Out of all of these examples, BY FAR the most surprising is DASH - a proof of work token that had no presale.
Here's what they said, and why it's important: