Chia Network CEO Gene Hoffman claimed that the XCH token was not a security, but the company was working to register it with the U.S. Securities and Exchange Commission (SEC).
SEC Chairman Gary Gensler said on Feb. 25 that “everything but bitcoin is a security.”He claimed that all other crypto tokens, except Bitcoin, have project teams working to promote the tokens and attract investors.
Based on the Howey Test, a token is considered a security if it “invests funds in a general enterprise with a reasonable expectation of profit from the efforts of others.”
In response, Gene Hoffman, CEO of Chia Network, said: Said Chia’s native token “XCH” is not a security. He argued that XCH, a requirement for classifying securities under the Howie test, was not sold to the public.
Chia registers XCH
Hoffman added that the company plans to register Chia’s shares with the SEC to legalize its operations.
However, former Ripple developer Matt Hamilton said that registering shares did not stop the SEC from pursuing Ripple.
Hoffman explained that Chia’s case is different from Ripple’s, given that Ripple sold XRP without a registration statement. He said:
“Selling your tokens without a registration statement could convert them into security. So don’t sell them before you have a registration statement,” Hoffman said.
Hoffman added that he wouldn’t be surprised if Ripple filed a lawsuit against the SEC because XRP was sold without a registration statement.