We’ve also provided years of guidance to market participants on what does or does not constitute a crypto asset security, including the DAO report in 2017 and the staff’s “Framework for ‘Investment Contract’ Analysis of Digital Assets” in 2019. More than 100 Commission orders, settled actions, and court decisions also have made clear when the offer and sale of a token is a security, including our actions against Telegram, LBRY, and Kik.
In fact, we alleged just this week that Binance’s chief financial officer and chief compliance officer were aware of the Kik case’s relevance to their own business. According to our complaint against Binance, as a result of the SEC’s action against Kik, Binance insiders realized that they would need to “start prepping everything” for a subpoena and Wells notice relating to their exchange token, BNB, including a “War chest.”
When crypto asset market participants go on Twitter or TV and say they lacked “fair notice” that their conduct could be illegal, don’t believe it. They may have made a calculated economic decision to take the risk of enforcement as the cost of doing business.
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