Solana, Cardano, and Polygon May Avoid 'Securities' Classification for Now in SEC-Binance Lawsuit

A new court filing shows that the U.S. Securities and Exchange Commission (SEC) might be holding off on declaring altcoins like Solana, Cardano

The U.S. Securities and Exchange Commission (SEC) might be holding off on declaring altcoins like Solana, Cardano, and Polygon unregistered securities in an ongoing Binance lawsuit, giving the "third party crypto assets" more time to avoid being designated securities, according to a new court filing.

However, the crypto community celebrated the news after former President Donald Trump spoke out against the SEC at the Bitcoin Conference in Nashville over the weekend. While there's no information suggesting that Trump directly intervened to produce the shift, his speech included plans to oust current SEC chairman Gary Gensler to exuberant applause.

Trump's speech came as the SEC has angered the crypto community for going after high-profile crypto firms, and failing to provide transparency and clarity to help the industry grow amid regulatory red tape. Despite previously calling crypto a "scam," Trump embraced crypto talking points of unseating the chairman of the SEC, and took meetings with crypto figures in Nashville for $800,000 a person.

In the court filing, the SEC proposed an amendment to its original complaint, which was filed last summer and alleged that Binance sold unregistered securities through its Binance Coin (BNB) and mishandled customer funds. The agency said it planned to drop allegations related to Filecoin, Algorand, Axie Infinity, Decentraland, Cosmos and other third party digital assets.

If the amendment is successful, the SEC is also requesting that the court not rush to an immediate judgment on the legal categorizations of these altcoins as it looks at how Binance, the world's largest cryptocurrency exchange by trading volume, allegedly mishandled customer funds and violated securities laws.

"The SEC does not believe that there is a need for the court to issue a ruling as to the sufficiency of the allegations as to those tokens at this time," the agency said in the filing. "The court may, of course, still make a later determination on those tokens, along with the other tokens."

Solana, Cardano, Polygon may avoid 'securities' classification for now in SEC-Binance lawsuit

Solana (SOL), Cardano (ADA), and Polygon (MATIC) are among the slew of altcoins that the SEC is no longer alleging to be unregistered securities in an ongoing lawsuit against Binance.

The new development comes after the crypto community expressed outrage over the SEC's handling of the crypto industry, which includes going after high-profile crypto firms like Kraken and BlockFi. While the SEC has been ramping up its regulatory efforts in the wake of the FTX collapse, members of the crypto community have been calling for the agency to provide more clarity on how digital assets are categorized under securities law.

In recent months, there have been growing calls for Gensler to resign from his post as SEC chairman, especially after President Biden appointed him to the role despite his previous statements about crypto being a scam. Interestingly, Trump embraced this talking point during his speech at the Bitcoin Conference in Nashville.

"They put in a guy from Goldman Sachs who hates crypto. He wants to regulate crypto out of existence," Trump said at the event. "Together, we will get rid of the crypto chairman, and we will put in somebody who understands the crypto world, who wants to help crypto grow in the United States."

Later in his speech, Trump mentioned meeting with crypto figures in Nashville for $800,000 a person, which he said would go towards covering the costs of the event. "I like crypto a lot. I think it's great," he added.

"We love Donald. He saved the day for crypto,” Tyler Winklevoss, the co-founder of the crypto exchange Gemini, wrote on social media on Tuesday.

Winklevoss thanked Trump for shifting the narrative around crypto in the mainstream media, and for speaking out against the SEC. However, it's important to note that there is no information in the court filing or Trump's speech to suggest that Trump directly intervened to produce the shift in the SEC's approach to the Binance lawsuit.

For now, the decision to tackle the legal categorization question rests on if Binance and the SEC agree on a date for the discovery phase of a lawsuit, which Binance is looking to delay until it reviews the SEC's proposed amendments to the complaint.

"It is premature and unreasonable for the SEC to expect them to agree to conduct merits discovery for claims on which the SEC may soon seek leave to amend its allegations," lawyers for Binance said.