Crypto News: Is Cardano Next on SEC’s Radar?

• The US Securities and Exchange Commission has filed a 101-page lawsuit against the leading cryptocurrency exchange – Coinbase, claiming that it has been violating securities regulations.
• One of the 13 cryptocurrencies listed in the complaint is Cardano’s ADA, which is classified by the SEC as a security.
• The SEC has identified three entities behind Cardano – The Cardano Foundation, IOHK, and Emurgo – that have used investor funds to fund the development, marketing, business operations, and growth of the Cardano protocol.

SEC’s Lawsuit Against Coinbase

The United States Securities and Exchange Commission (SEC) has filed a 101-page lawsuit against Coinbase – one of the leading US-based cryptocurrency exchanges – claiming that it had been violating securities regulations.

ADA Classified as Security

In its complaint against Coinbase, the SEC included a list of 13 cryptocurrencies classified as securities. One of them was Cardano’s ADA token.

Entities Behind Cardano

The three entities responsible for Cardano are The Cardano Foundation, IOHK, and Emurgo – with this last one being its for-profit arm. According to the SEC’s claim: “These three entities have used the proceeds from ADA sales to fund the development, marketing, business operations, and growth of the Cardano protocol” such as enacting its Roadmap created by IOHK.

SEC’s Considerations Regarding ADA

The Commission laid down several considerations when classifying ADA as a security. These include how investors were promised profits based on their investments in terms of appreciation in value or income from using tokens; how they relied upon these promoters’ essential managerial efforts; and how investors paid money in exchange for tokens with an expectation of profits derived from efforts coming from those same promoters or third parties associated with them.

Conclusion

Coinbase has now become part of another legal battle alongside Binance facing charges by US regulators about violations related to federal securities laws. As part of this case involving Coinbase specifically, ADA was also identified as a security according to certain factors outlined by the SEC in its complaint against Coinbase.