The positive decision of the SEC and Ripple case in favor of crypto may have cleared DeFi altcoin projects like AVAX and UNI.
DeFi altcoin market breathes a sigh of relief with Ripple victory
Numerous DeFi altcoins, from Uniswap to Curve, are no longer securities, according to the court ruling in the SEC lawsuit. Uniswap, Compound, Aave, Curve, Yearn and many more altcoins were released through an airdrop just like XRP. The projects gave free tokens to their early participants. That’s why they don’t follow the Howey Test’s first rule that it’s an “investment of money”.
On the other hand, since XRP was given to the public free of charge in 2013, it was considered that it was not a security, and the clear decision to give it to employees underlined this finding once again. With the final decision, the sale of these tokens on exchanges will not be seen as securities. However, the court partially ruled that only 1% of XRP volumes are sales made by Ripple Labs.
As a result, the court ruled that there is no expectation of profit as individual investors do not know that they are buying from Ripple Labs rather than from other XRP holders. Therefore, DApps should make sure that a sufficient proportion of all tokens are given to the public in the airdrop. Because the percentage of volume from the sale of the funds they hold determines whether their sale is a security.
In addition, the court found that the effective off-exchange sale of these tokens is a security. The trial judge was more precise regarding the sale to institutional investors. But the rationale for the decision was mainly because these organizations knew they were buying from Ripple Labs and therefore had profit expectations. cryptocoin.com As we have quoted, former SEC executive John Stark draws attention to some contradictions on this issue.
AVAX and UNI are no longer ‘securities’
On July 13, the New York court ruled that XRP does not constitute an investment contract. This also includes DeFi altcoin projects that have been fighting the SEC for a long time. JPMorgan analysts also said that altcoins declared as securities in the Coinbase lawsuit are now going strong. Together with AVAX and UNI, the biggest projects in the DeFi altcoin market took a sigh of relief:
- Avalanche (AVAX)
- Wrapped Bitcoin (WBTC)
- Dai (DAI)
- Chainlink (LINK)
- Uniswap (UNI)
- Lido DAO (LDO)
- Internet Computer (ICP)
- AAVE (AAVE)
- The Graph (GRT)
- Maker (MKR)
- Stacks (STX)
- Tezos (XTZ)
- Theta Network (THETA)
- Phantom (FTM)
- Synthetix (SNX)
- Injective (INJ)
- Curve DAO Token (CRV)
- Rocket Pool (RPL)
- Compound (COMP)
- Conflux (CFX)
Defi projects now need to fear much less from the SEC
The US court found that the SEC had no jurisdiction over airdrop activities. The vast majority of DeFi projects followed this method. But it’s possible for the SEC to still file an appeal. However, Ripple CEO Brad Garlinghouse says that in such a case, the market will be safe for years. He trusts that in the end the winner will be cryptocurrencies again.
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