Billionaire Mark Cuban Suggests How Crypto Can Avoid SEC Lawsuits in Future

Mark Cuban, co-host of Shark Tank and a wealthy investor, responded to a tweet that discussed the SEC’s declaration of Filecoin (FIL) as a security and the SEC’s letter to Grayscale on this matter. The latter submitted a registration request for an investment fund based on FIL earlier this year and on May 16 obtained a response stating that FIL satisfies the requirements for a security.

Cuban, who has transformed from an outspoken opponent of cryptocurrencies to a proponent, has proposed a means for future crypto enterprises to become entirely decentralised and prevent future confrontations with the U.S. securities commission.

Here’s Mark Cuban’s suggestion

Cuban said that releasing the whole quantity of their tokens without holding back any for a treasury is a situation that may occur for crypto-issuing platforms. After using DeFi to offer liquidity using the released tokens, the original business that issued the tokens should be dissolved, according to Cuban.

In such scenario, according to the billionaire, “there is true decentralisation,” and regulators like the SEC won’t be able to “close the token down,” charging it of being a security, as it has done with XRP, FIL, and other cryptocurrencies.

This won’t work with filecoin or chains that release their own token, but what may come next is for tokens is to release them all, leaving no treasury, take the receipts and use them to provide liquidity using defi for trains the token , and then dissolve the original entity…

— Mark Cuban (@mcuban) May 23, 2023

Pro-XRP lawyer responds to Cuban

John Deaton, the creator of CryptoLaw and an outspoken backer of Ripple in the SEC lawsuit, made a statement about that and said, “This is smart and probably in someone’s playbook at the moment.” Even yet, the attorney is adamant that the blockchain industry and the crypto community must continue to combat the SEC’s notion that all tokens other than Bitcoin are securities.

According to Deaton, “the underlying asset is never the security” in an investment contract.

This is smart and probably in someone’s playbook at the moment. But we must continue to fight the SEC’s narrative that the the underlying asset itself (the token) is the security. In an investment contract, the underlying asset is NEVER the security. https://t.co/hhayixgnJR

— John E Deaton (@JohnEDeaton1) May 24, 2023

Grayscale’s reaction to SEC’s letter

According to a recent news release, Grayscale disagrees with the SEC that Filecoin’s FIL token qualifies as a security under federal securities laws and plans to reply to the regulatory body shortly.

The SEC’s response is currently unpredictable, and should the regulator object, Grayscale will look for alternative options to form a trust under the Investment Company Act of 1940. The news statement states that if this fails, it will apply to close the FIL Trust.