Animoca Brands has announced that it is focusing on markets outside the USA following the country’s Securities and Exchange Commission’s (SEC) decision to label its cryptocurrency token, Sand, as an unregistered security, reports the South China Morning Post.
Sand was one of more than a dozen cryptocurrency tokens named in SEC lawsuits against exchanges Binance and Coinbase Global, alongside the likes of Polygon and Solana. The SEC ruling that Sand is an unregistered security raises legal risks for any companies selling the tokens.
As the native crypto token of Animoca Brands’ metaverse platform, The Sandbox, this could put the company at significant risk, especially as The Sandbox has previously collaborated with major global brands such as The Walking Dead and Square Enix.
“Animoca Brands is not focused on a single territory but operates globally,” said co-founder and chairman Yat Siu, via email. “The SEC focuses on the US, so that should not have an impact on Animoca Brands in broader markets where Sand is widely available and accepted, including in more progressive jurisdictions like Hong Kong and Japan.”
Siu went on to state that the company had “started to take steps to place more emphasis on other markets” due to the USA’s “blockchain-hostile” approach.
A sandstorm of controversy
Coinbase CEO Brian Armstrong appeared ready to take the fight to the SEC, stating that his company had no intention of delisting any of the tokens named in the suit, including Sand.
Armstrong’s words set the stage for a legal fight regarding when a crypto can be considered a security. Cryptocurrency, NFTs, and the blockchain have all struggled with common perception and their ability to present what they offer in an easily understandable way.
To an extent, this has been a struggle faced throughout the tech industry. The CMA’s recent decision to block Microsoft’s acquisition of Activision Blizzard came down not to competition concerns in the mobile or console spaces, where it had faced the majority of criticism, but to concerns that it could affect the cloud gaming industry, despite Microsoft’s insistence that it would make Activision Blizzard’s titles available across cloud platforms. Regulators worldwide have proven somewhat slow on the uptake when it comes to deciding when and where they need to step in and impose restrictions on the tech industry, and in many ways this latest lawsuit is in-line with previous decisions.
Binance, however, has historically proven somewhat more willing to play ball, having previously delisting the crypto token Amp after it was identified as an unregistered security by the SEC in a separate lawsuit.
The heart of the complaint regarding Sand is whether or not a token was used for fundraising, and whether buyers can expect a return on investment. The SEC claim that Sand raised $3 million through private sales on Binance.com, and that buyers could “reasonably view Sand as an investment in and to expect to profit from [the company’s] efforts to grow the Sandbox protocol.”
Speaking to Decrypt on Thursday, Sandbox co-founder and COO Sebastien Borget stated that while it doesn’t “necessarily agree with the characterisation” that Sand is a security, it has no plans to change the platform’s business “on a day-to-day basis”.
We listed Animoca Brands as one of the top 50 mobile game makers of 2022.
