Some crypto assets are securities, Manhattan judge says, complicating Coinbase and Ripple cases



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  • Cryptocurrencies are considered securities regardless of the context in which they are sold, a federal judge said.
  • The opinion came from the same Manhattan federal court that handed down a controversial ruling involving a crypto asset called ripple that said the opposite.
  • Private companies, lawmakers, and regulators have tussled over whether cryptocurrencies are considered securities.

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Hon Chang-joon, business partner of Do Kwon, the cryptocurrency entrepreneur who created the failed Terra (UST) stablecoin, is taken to court in Podgorica, Montenegro, March 24, 2023. 

Stevo Vasiljevic | Reuters

A Manhattan federal judge said in an opinion that cryptocurrencies are considered securities regardless of how they are sold. It allows the Securities and Exchange Commission to pursue securities charges against Terraform Labs and its founder Do Kwon and has broad ramifications for crypto legislation and litigation.

U.S. District Judge Jed Rakoff’s decision Monday complicates SEC’s litigation with both Ripple and crypto exchange Coinbase.

The SEC had alleged that Coinbase engaged in the unregistered offer and sale of securities. Coinbase strongly denies that it has listed any crypto asset securities. Coinbase sharesare down about 4,5% in Tuesday trading.


The opinion contradicts an earlier ruling from the same district court that said ripple, another cryptocurrency, may not be categorized as a security in all circumstances. It will not impact the prior opinion.

The Ripple ruling was considered a win by the industry because it said a cryptocurrency may or may not be a security depending on who’s buying it. The SEC has argued in cases against Binance, Coinbase and Kraken that many cryptocurrencies listed on popular exchanges are securities.

“The Court declines to draw a distinction between these coins based on their manner of sale, such that coins sold directly to institutional investors are considered securities and those sold through secondary market transactions to retail investors are not,” Rakoff said of the prior ruling in the Ripplecase. “In doing so, the Court rejects the approach recently adopted by another judge of this district in a similar case.”

Kwon and Terraform Labs are accused of committing a massive fraud upon investors through the unregistered offer and sale of multiple cryptoassets, including luna and a stablecoin called terraUSD.

The opinion from Rakoff also lends support to arguments from some lawmakers, who have said that crypto legislation is needed to clarify the role of regulators and the courts over crypto markets.

The SEC has pursued numerous other crypto firms over the alleged unregistered offer and sale of securities, including Coinbase, Gemini and Genesis.

— CNBC’s Lora Kolodny contributed to this report.

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