- The SEC has targeted several altcoins, including Polygon (MATIC), Terra Luna Classic (LUNC), The Sandbox (SAND), Decentraland (MANA), and Chiliz (CHZ), for being offered as unregistered investment contracts linked to their enterprises.
- On-chain data also shows that address activity for three altcoins Render (RNDR), Aave (AAVE), and Maker (MKR) is showing a bullish structure going ahead.
As per a leaked court filing, the U.S. Securities and Exchange Commission (SEC) shared its reasons for cracking down on several altcoins including Polygon (MATIC), Terra Luna Classic (LUNC), The Sandbox (SAND), Decentraland (MANA), and Chiliz (CHZ).
The securities regulator stated that all these altcoins were initially offered to investors as investment contracts linked to their affiliated enterprises. Through its scrutiny, the US SEC highlighted one incident from April 2021, when Polygon Labs sold out 19% of its MATIC supply and in turn, raised $5 million through the sale of unregistered securities on Binance via the Initial Exchange Offering (IEO).
Polygon Labs sold each of the MATIC tokens at a price of $0.00263, stating that the intended proceeds would go toward blockchain development.
A similar scenario involves CHZ, a blockchain platform focused on sports, which features over 100 officially licensed crypto tokens linked to prominent sports franchises. Referring to Chiliz’s whitepaper, the SEC detailed CHZ’s tokenomics, particularly highlighting a 58% allocation toward operating expenses.
LUNA Was a Part of Equity for Terraform Labs
The court filing for Terra Luna Classic outlines the Terraform Lab’s communication regarding the original LUNA token as a representation of equity in the firm. As per the US SEC, the 2018 LUNA token sale agreement explicitly stated that the funds raised were intended for the development and operation of systems by Terraform.
The role of LUNC in the SEC’s case may vary. Recently, the SEC finalized a significant $4.5 billion settlement with TerraForm Labs, the parent company of LUNA, and other tokens mentioned in the legal proceedings.
Following the bankruptcy proceedings of Terraform Labs earlier this year, it is likely that the LUNC and USTC tokens will move out of circulation this year since these assets could be liquidated to cover the $4.5 billion fine imposed by U.S. financial regulators.
Altcoins currently on Radar
On-chain data provider Santiment reported a strong surge in the address activity for three major altcoins: Render (RNDR), Aave (AAVE), and Maker (MKR) over the past few days. Historically, there’s been a surge in the number of wallets interacting on these networks along with a strong indicator of future bullish behavior. Santiment predicts positive trends for these altcoins soon.
Furthermore, Santiment also stated that altcoins like Litecoin (LTC) and XRP are experiencing FOMO as the crypto market continues with a strong rebound. While these coins have the potential to continue rising, the current euphoria surrounding them suggests they could be high-risk, high-reward investments this week.
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