Ripple and SEC are in a legal fight for months over whether XRP is a security or not, but if you are a holder of BNB or Tether, then you may not be as safe, according to a legal expert.
The lawyer looked at the top 5 crypto by market capitalization and their likelihood that the SEC will crack down on them for a securities breach, and only BTC seems safe to him.
According to legal expert, BNB and USDT meet the criteria that the SEC considers in relation to securities violations. And once Ethereum gets down to proof of stake, ETH could be more exposed to the wrath of the SEC.
Lawyer Jeremy Hogan is loved in the crypto community for his legal videos. In his latest video on his YouTube channel “Legal Briefs” he discussed his opinion on a possibility of SEC considering BNB, USDT and ETH 2.0 as security.
The SEC evaluates whether an asset is a security or not using the famous Howie test.
Hogan SEC Danger rating for BTC: 2/10
The king of crypto is the least susceptible to being called a security. However, contrary to popular belief, BTC is also centralized to a certain extent. 1,000 people own up to 40 percent of the supply, and 2 percent of wallets control 95 percent of all BTC in circulation.
If the SEC believes there were some general enterprises manipulating the price of Bitcoin, SEC could come after BTC.
There is an argument against Bitcoin, but it is very weak. I would not have lost my sleep over this.
Hogan SEC Danger rating for ETH: 4/10
Ethereum is also very decentralized. But, unlike Bitcoin, Ethereum has a central entity – the Ethereum Foundation, which has a big impact on ETH. More importantly, Ethereum raised money from investors before it started in a pre-selling. This makes ETH more likely to fall under the SEC purview for violating securities rules.
Former SEC director William Hinman once stated that only Ethereum and Bitcoin are exempted from securities classification. However, according to Hogan, it won’t matter if the SEC decides to go down to Ethereum.
Hogan SEC Danger rating for ETH 2.0: 6/10
Ethereum is moving to proof-of-stake in its ETH2 protocol update. This makes it even more likely to be classified as security, Hogan said. The biggest problem is with ETH2 staking functionality, where investors stake their money and expect to make a profit. This would be in line with the SEC rule that if investors expect profit from the efforts of others, it makes the asset a security.
Definitely seems like the SEC might see a promotion and improvement of the network by a semi-centralized entity with the rollout of ETH2.
Binance Coin (BNB)
Hogan SEC Danger rating for BNB 8.5/10
Binance Coin (BNB) isn’t doing too well either. Binance held an ICO in July 2017 and sold BNB to the public, some of which were American. The exchange has a big impact on the performance and profitability of the BNB token. Binance even buys back some of the BNB and burns them, just to make BNB more valuable.
Hogan SEC Danger rating for USDT: 9/10
Tether is one of the most controversial coins on the market and is most likely to be hit by the SEC according to Hogan. USDT troubles have been building on for years, and the New York attorney general accuses the company of misleading the market about supporting its tokens. In addition, the company prints USDT at will and is directly involved in maneuvering crypto market.
I would say that gives Tether a 9 out of 10 on the danger rating, but you don’t own it, and probably never will and so I’m guessing you don’t care too much.