Dash (DASH) community has rejected the US Securities and Exchange Commission (SEC) claims (p. 39, 40) on the Bittrex regulatory crackdown case that labels DASH as an unregistered security.
On Tuesday, April 18, the official Twitter account of the unofficial Dash community said that the SEC had made very dubious claims, and that there was “no reasonable interpretation” to classify DASH as a security token.
Howey Test Doesn’t Apply to DASH
As Blockchain Journal reported earlier, on Monday, April 17, the US SEC unleashed its latest salvo in its war on crypto by charging Bittrex cryptocurrency exchange, its co-founder, and former CEO William Shihara for operating an unregistered national securities exchange.
As per the claims of the US securities regulator, OMG, Algorand (ALGO), Monolith (TKN), Naga (NGC), IHT Real Estate Protocol (IHT), and Dash (DASH) tokens traded on Bittrex are unregistered securities.
The SEC uses Howey Test to check the status of assets. Under the Howey Test, a transaction qualifies as a security if it is an investment of money in a common enterprise with the expectation of profit from the efforts of others.
However, according to Dash, none of the Howey checks applies to DASH. KALEO, the co-founder of the NFT project LedgArt, points out the SEC argument that DASH investors have expectations of profits, as the token supply is limited and deflationary.
The community account rejects this claim by saying:
“There is no reasonable expectation of profits with Dash. It’s a payment technology. Miners get paid for mining, masternodes get paid for running nodes, but no one gets paid for just holding Dash.
“You can buy it, but you don’t need to: anyone anywhere can mine.”
Dash Community Hits Back
The SEC complaint also mentions the DASH DAO and DASH Core Group probably to satisfy “the common enterprise” and “the efforts of others” requirements of the Howey Test. Dash argues that DASH DAO is only a group of DASH holders, and no one “should have any expectation of the DAO doing ANYTHING in particular.”
Furthermore, the Dash Core Group did not even exist since 2017, and that organization also submitted a no-action letter to the SEC years ago, constructing a legal argument against Dash being a security.
The Dash Community added:
“The second is that Dash holders expect masternodes to improve their fortunes. Masternodes ARE Dash holders. You can’t “buy a masternode.” Any holder with 1,000 Dash can run one (not all do). Any number of people owning a total of 1,000 Dash together can form a masternode.”
The community also highlighted Crypto Rating Council remarks that rates DASH the same as BTC and LTC in that it is least likely to be considered a security. The community said that “the SEC has simply gone rogue” as it has reverted its stance on many cryptos, including Ethereum and Algorand.
KALEO also expressed his surprise that the SEC had labelled DASH security. He concluded:
“This is such a weak argument to include against DASH considering the precedent BTC sets imo (especially considering how many times Gensler has re-iterated BTC is a commodity, not a security) Really surprising they include it.”
