I am interested to understand this term in general way as well as in the context of latest development in the crypto community with SEC starting a lawsuit against Binance saying its platforms traded 10 tokens that are securities.
What are securities in general and how is that applied to crypto currencies?
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In the case of Binance, they are basically just totally violating the law while saying that they are not. It’s the “stop hitting yourself” legal strategy, they are going to lose and it’s going to go down hard.
When people talk about “securities” they are normally talking about shares. This is when you are basically buying a peace of paper that says you are entitled to a fraction of a company. Securities are highly regulated, shareholders have rights, companies have oblations. There’s rules about the information that companies need to provide, LOTS of paperwork filings and so on before companies can sell shares to the public.
There’s a LOT of regulation, it can be very burdensome for companies but there’s good reasons that they exist. Binance has decided that it does not want to do any of this work, and they have decided that BNB is not a security and therefore it should not have to do all this work.
In reality, this is a “if it quacks like a duck” kind of situation. BNB is a security, just because Binance says it’s not does not mean it’s not. BNB has all the attributes and properties of a security and therefore all the securities regulation should apply. Binance has just decided they don’t want to.
So the government is getting involved to make them. If you’ve ever seen the Monty Python dead parrot sketch, that’s basically what’s happening here.
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