The SEC in recent days has swept through the crypto market highlighting how many tokens that are listed on Coinbase and Binance fall under the classification of “security,” including DASH.
However, the community of the latter argues that the crypto does not have the connotations to be classified in this way by making claims about the nature of the decentralized technology used as a payments system.
Let’s look at all the details of the case together.
The SEC accuses the Dash crypto of being a security
In the SEC’s recent lawsuit formally filed against Coinbase in New York District Court, the Dash cryptocurrency was recognized as a “security” financial product.
The term security refers to an asset that, before being sold to US citizens, should receive specific authorization, in line with the Securities Act of 1933 standard.
This type of product takes the form of a security in which individuals who invest in it expect a financial return, linked to the performance of the company that issues and manages it.
This is not the first time that DASH has been targeted by the SEC, so much so that in April in the lawsuit against the exchange Bittrex, the cryptocurrency was already singled out as a security along with OMG, ALGO, TKN, NGC and IHT.
The thing that is causing discussion about the federal agency’s stance is that in the charges brought against Binance, DASH was not mentioned as a security, even though it was listed on both the international platform and the one dedicated to US citizens, namely Binance US.
The SEC itself can’t even decide what it thinks is or isn’t a security. #Dash is listed on @Binance, but somehow Binance isn’t in trouble for listing it? 🤡
Ignore the noise, keep using the world’s best peer-to-peer digital cash ⚡️💵 https://t.co/SRPUKyjri1
— Dash⚡💵 (@Dash_Community) June 9, 2023
The DASH community uses the clown emoticon, which is reasonably appropriate to describe the bizarre actions of the US Securities and Exchange Commission.
In any case, according to the federal agency, DASH is considered an unregistered security because according to it there is a centralized “core group” dedicated to the development of the cryptocurrency.
Thus, the team’s work to improve the product and promote it makes it an investment in its own right.
Of note is the fact that DASH is one of the few cryptocurrencies with a proof-of-work consensus mechanism to be labeled as a security.
DASH is the only major POW token listed as a security by the US SEC. What is the reason? The indictment explained in detail the existence of a centralized Dash Core Group and its promotion and the information it releases makes holders an investment. https://t.co/o7rZqL6Y3R pic.twitter.com/K7zTUywTmt
— Wu Blockchain (@WuBlockchain) June 8, 2023
The response of the Dash community
Faced with the SEC’s allegations, the DASH community has responded more than comprehensively that its cryptocurrency cannot be categorized as a security, for a number of reasons.
First of all, the crypto represents a decentralized payment system, not controlled by any entity, but managed through a distributed ledger among the network nodes.
Furthermore, analyzing the definition of security provided by the “Howey test,” used by the SEC in this context to define whether or not an asset falls into this category, DASH definitely seems to fall outside.
The definition states the following:
“investment of money in a joint venture with a reasonable expectation of gain from the efforts of others.”
The DASH community has no expectation of profit, as it is a payment technology: miners get paid for their computing power, masternodes get paid to run a node, but no one gets paid or rewarded for holding the DASH coin.
Moreover, from what the community says, the “core group” mentioned by the SEC has not existed since 2017, and there is no fictitious entity receiving money from the development activities of the payments system
The SEC’s very shaky case makes a couple of dubious claims. First is that “Dash Control Group”, a fictitious entity (so embarrassing to make such a mistake in a lawsuit! 🤣), receives the majority of fund.
Not true, and Dash CORE Group didn’t even exist until ~2017!
— Dash⚡💵 (@Dash_Community) April 17, 2023
Finally, another argument in favor of DASH’s innocence is the fact that the “crypto rating council,” an entity that helps emerging cryptocurrencies to be in line with US regulations, gave a score of 1.0 in its evaluation of the security concept.
To make the point, even Bitcoin, publicly excluded by the SEC as a security, has the same score as DASH.
A final comment
The explicit motivations of the crypto community seem abundantly appropriate to refute the federal commission’s allegations.
DASH represents decentralized technology that users exploit independently and without expectation of profit.
Of course there are those who buy the DASH coin hoping to make a profit in the immediate future, but this reasoning governs any type of cryptocurrency, including Bitcoin, so it proves fallacious in this area.
Instead, the concept of a central entity regulating DASH code developments and making money from such activity represents an argument worth pondering.
If indeed the existence of a “core group” were disproven in court, then DASH would be exonerated of the charge.
In the meantime, there are those who show that it is possible to use AI technology via ChatGPT to write some DASH-specific codes, showing that the project is open source.
When reflected upon, we understand that it is really bizarre to point to an open source code of being a security.
Once again chapeau SEC.
This Monday at 4pm UTC, watch @ajcwebdev generate some Dash code using @OpenAI’s ChatGPT-4 pic.twitter.com/gNFSFIezmu
— Dash Incubator (@DashIncubator) June 8, 2023