Legal expert and XRP attorney Jeremy Hogan shares his view on the likelihood that several large-cap digital assets will face securities lawsuits from the U.S. Securities and Exchange Commission (SEC) in the future.
Hogan analyzes the likelihood of the SEC going after Cardano (ADA), Dogecoin (DOGE), Polkadot (DOT) and Uniswap (UNI) based on a “danger score” of 1-10, with 10 being the most likely. HOT Holo price has risen.
The attorney notes that ADA was first released as an initial coin offering, something he says is “problematic” regarding potential SEC lawsuits. Hogan notes, however, that Cardano protected himself with a clever legal maneuver.
“The general thinking at the SEC is that almost all ICOs are sales of securities. However, Cardano did something that was very clever legally. The first coin offering took place in my old stomping grounds of Japan, which as you may have heard, very legal friendly to crypto. About 95% of the ICO was for Japanese citizens, and from there sales went into exchange for sale to Americans.”
Ultimately, Hogan says there is “some danger” that the SEC will go after Cardano, but he limits his hazard rating for ADA to “2.5 out of 10.” As soon as the SEC sues exchange number one, the other exchanges will also be taken off the list. But it’s never been done before, so the danger is somewhat remote.”
Next on the list of advocates is Dogecoin, whose Hogan notes had no ICO or sale as 95% of Dogecoin was mined within the first year. He gives the token a hazard rating of 2/10. “I think the SEC would only become more of a joke if it sued a joke coin. So I don’t see any problems on the horizon here.”
Hogan believes Polkadot is more at risk than the other two digital assets
“The Web3 Foundation, which designed and set up the Polkadot platform, had a number of ICOs that started in 2017 and has apparently raised $200 million so far. And to make matters worse, the ICOs took place before the Polkadot platform was fully functional. Not good. This is bad because the sale of the DOT coin is more like an investment contract where buyers rely on the efforts of others – the developers – to increase the value of the token.” Doge price has risen.
Hogan says it helps that the Web3 Foundation is a non-profit organization organized in Switzerland, outside the jurisdiction of the SEC. ICO sales were not made available to Chinese and US buyers. Like Cardano, the attorney notes that the SEC could go on exchanges if they believe DOT was being sold “in the nature of a security.” He gives Polkadot a hazard rating of 5/10.
Uniswap, Hogan explains, used a different model than Polkadot or Cardano
“What’s interesting about Uniswap – developed by Uniswap Labs – from a legal standpoint is that last year the network started trying to decentralize itself by distributing tokens through an airdrop…
Meanwhile, Uniswap Labs employees and the like received about 40% of the UNI stock, which was to be released over a four-year period, similar to Ripple’s escrow. It is an interesting approach to release tokens because under current securities laws there is a relatively strong argument that the airdrop was the transfer of a security. The analysis is somewhat cumbersome.”
However, Hogan notes that Uniswap Labs did not have an ICO and did not profit from the airdrops
“The point is, if the SEC sues Uniswap Labs and wins, what will be the result? There are no profits to take from Uniswap. So what incentive does the SEC have to file the lawsuit? Is it about principle? I do not think so.”