Seasoned crypto expert, influencer and investor Dan Gambardello of Crypto Capital Venture explains why the U.S. SEC is highly unlikely to label Cardano (ADA) as a security.
Dan Gambardello optimistic about ADA security status, here's why
The ongoing scandal with Binance USD (BUSD) and USD Coin (USDC) security statuses will not result in similar issues for Cardano's native cryptocurrency, ADA. Mr. Gambardello indicated one precedent and one fact to prove his take.
ADA will likely not be considered a security. 2 simple reasons:— Dan Gambardello (@cryptorecruitr) February 14, 2023
1. #Cardano ICO was in Japan, not available to US investors.
2. A judge recently ruled in LBRY case that secondary sales of $LBC tokens were not securities. This sets an important precedent for things like $ADA.
First of all, Cardano's (ADA) initial coin offering (ICO) was organized in Japan; all U.S. investors were prohibited from taking part in this fundraising. In 2016, the protocol raised over $62 million at $0.0024 per ADA.
As such, U.S regulators will not be able to charge Input Output Global, EMURGO and other firms involved in Cardano (ADA) development and marketing with the offering of unregistered securities.
Gambardello recalled the famous LBRY v. SEC case. In this case, the U.S. judge ruled out that secondary sales of LBC tokens could be treated as securities sales. Cardano (ADA) looks the same in this context for Gambardello.
Why is this important?
Being dubbed a "security" is the worst thing that could happen to a crypto token as it changes the regulatory status of all of its tokenholders. For instance, the alleged security status of Binance USD (BUSD) made its issuer, Paxos Global, cease minting the tokens.
Also, the legal battle between Ripple Inc. and the SEC over the security status of XRP has gone on for over two years with no clear winner. Should Ripple lose, its founders would be charged for a $2 billion unregistered securities offering.
At the same time, the confirmed "nonsecurity" status is very rare in crypto. In 2022, Polkadot (DOT) became the only token that managed to obtain it.
Representatives of Web3 Foundation highlighted that their token has "morphed," and its nonsecurity status is the result of three years of collaboration with SEC.