The Securities and Exchange Commission (SEC) categorized six cryptocurrencies as securities in its lawsuit against crypto exchange Bittrex on Monday, highlighting them as potentially pivotal assets in an enforcement action against the Seattle-based firm.

The crux of the SEC’s complaint against Bittrex is that the platform failed to register with the watchdog as an exchange, broker-dealer, or clearing agency—a requirement for offering securities to customers in a manner regulated by the Securities Exchange Act of 1934.

In order for that to be true, the SEC needs to establish that at least one of the tokens made available by Bittrex is indeed a security. And though SEC Chairman Gary Gensler has claimed the label applies to everything but Bitcoin, the agency has honed in on six specific coins in this latest action.

The tokens listed as examples of “crypto asset securities” are OMG Network (OMG), Dash (DASH), Monolith (TKN), Naga (NGC), Real Estate Protocol (IHT), and Algorand (ALGO). The agency even says there will likely be more, describing the lineup as a “non-exhaustive list.”


Of the tokens included in the lawsuit, Algorand is by far the largest by market capitalization, with a total value of around $1.6 billion, according to CoinGecko. Over the past day, the token has fallen 4% to $0.22 as of this writing.

Algorand did not respond immediately to requests for comment from Decrypt.

Crypto Twitter zeroed in on the connection between Gensler and Algorand following the Bittrex lawsuit’s announcement, where Gensler previously called the network “great technology” that could support a ride-sharing service like Uber.


None of the six tokens’ issuers are named as defendants in the Bittrex lawsuit, and the SEC had not announced any separate charges against them as of Monday. The legal tactic bears a similarity to the inclusion of coins in other lawsuits brought by the SEC, Lawrence Law counsel J.W. Verret told Decrypt.

“It strikes me as very similar to the Wahi case,” he said, referring to the SEC’s insider trading lawsuit brought against former Coinbase Product Manager Ishan Wahi and two others last year. “​They're making claims that tokens are securities without suing the actual tokens themselves.”

The tokens named in the SEC’s case against Wahi are an entirely different cast of cryptos compared to those named in the Bittrex lawsuit, but the overarching idea is that they all fall under the classification of securities using the Howey Test.

Stemming from a 77-year-old lawsuit concerning a Florida citrus grove, the Howey Test is the SEC’s four-pronged method for determining whether an asset is a security, which involves the “investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.”

The lack of overlap between coins in the Wahi case and Bittrex’s lawsuit could be a result of the SEC not trying to put its eggs all in one basket, Fireblocks’ Chief Legal and Compliance Officer Jason Allegrante told Decrypt.

“Each case, depending on what the defendants want to do, is a potential test case,” he said. “There's probably assets they feel pretty strongly meet the definition of a security, and I guess they're kind of picking from that list and sprinkling them in as they go [about] in different cases."

In terms of Algorand, the SEC claims that the Algorand Foundation constitutes a common enterprise, based on the not-for-profit organization’s alleged role in conducting and promoting an initial token sale of ALGO in 2019.

“In promoting the ALGO token sale, the Algorand Foundation tied the potential growth of the Algorand blockchain to potential demand for the ALGO token itself, and to its own commitment to preserving a price floor for ALGO,” the lawsuit states.


The lawsuit notes that ALGO was added to Bittrex’s international and U.S.-based platforms in April 2020. 

Additionally, the SEC claims that statements made by Algorand and the network’s foundation “led ALGO investors to reasonably expect to profit from Algorand, Inc.’s and the Algorand Foundation’s efforts to grow the Algorand protocol.”

When speaking about the SEC’s case against Wahi, Policy Counsel at the Blockchain Association Marisa Tashman Coppel previously told Decrypt the case could have “huge implications on the industry,” potentially implicating other exchanges as venues that facilitate the sale of unregistered securities.

For example, as of Monday, ALGO was available on Coinbase and Kraken, two of the largest U.S.-based exchanges. But considering how the SEC’s case against Wahi has progressed so far, Verret said that a settlement is more likely as opposed to a ruling. 

“I don't think these claims could survive a challenge in court,” Verret said. “I think parties will settle, and we won't get a final answer, and that's why the SEC is making these aggressive claims.”

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