Decoding the SEC’s Legal Battle Against Cryptocurrency Titans: From HSBC to Adidas, Prada, Disney, Samsung, and Barcelona FC Caught in the Crypto Crossfire

By June 7, 2023The Sandbox
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The SEC claims that Bankman-Fried defrauded the investors who supported FTX by portraying it as a "safe, responsible" cryptocurrency trading company (Photo: Dado Ruvic/Reuters)

The U.S. Securities and Exchange Commission (SEC) this week shook the entire crypto circle by filing lawsuits against two major cryptocurrency exchanges, Binance and Coinbase. This exposed how over the past few years, numerous industry giants from Wall Street, Silicon Valley, the entertainment industry, the fashion industry, and even the world's top football clubs have bent over backwards to participate in the crypto sector, allegedly involved in illegal cryptocurrency financing or collaboration accused by the SEC.

Here are some of the well-known crypto projects or partnerships particularly mentioned in the SEC's lawsuit. They were either involved in securities financing without registration in violation of securities laws, or had project participants conducting securities issuance in violation of securities laws.

Most recently, on April 7 of this year, NEAR Foundation, developer of the NEAR blockchain, announced that one of the most creative NEAR Balkans Hub projects, Tekuno, had recently partnered with Mastercard to offer a unique real-world Non-Fungible Tokens (NFT) experience.

According to the SEC's complaint, the native token of the NEAR blockchain protocol, NEAR, is an unregistered security.

Two events from last year include, on March 16, HSBC and the decentralized virtual game based on the blockchain, The Sandbox, announced a partnership, making HSBC the first global financial services institution to enter The Sandbox Metaverse. HSBC will purchase a virtual plot of land, known as LAND, in The Sandbox Metaverse and develop on it to interact and establish good relationships with sports, eSports, and gaming enthusiasts.

The SEC lawsuit states that the digital token SAND issued by The Sandbox platform is an unregistered security.

On November 1, Protocol Labs, Filecoin Foundation, Ernst & Young, and other founding members announced the launch of the Decentralized Storage Alliance.

Ernst & Young is committed to the public blockchain, focusing on putting the necessary tools, systems, and services in place to help public sector and private enterprises use blockchain technology to solve the ecosystem's most pressing problems, including privacy, security, and regulatory compliance. Ernst & Young is capable of testing and auditing transactions in the blockchain environment, which gives companies confidence to move from simple tracing on the blockchain to transactions throughout the entire corporate lifecycle.

The native cryptocurrency FIL provided by the founding member Filecoin Foundation's distributed storage network Filecoin is an unregistered security.

On April 30, 2021, Dapper Labs, the developer of the Flow blockchain, announced a new financing round of $250 million led by hedge fund Coatue. In addition to Coatue, notable investors in Dapper Labs include top Silicon Valley venture capital firm Andreessen Horowitz (a16z), Union Square Ventures, Venrock, BOND, Sovereign Wealth Fund Singapore Investment Corporation (GIC), Google's venture capital arm Google Ventures (GV), Samsung, Dreamworks' founders, Reddit, Coinbase, Zynga, AngelList, and others.

The SEC alleges that the native token of the Flow blockchain, FLOW, is an unregistered security.

On May 18, 2021, Sygnum Bank announced that it has become the first bank to offer custody and banking services for the functional tokens of the Internet Computer blockchain.

The SEC asserts that the native token of the Internet Computer protocol blockchain, ICP, is an unregistered security.

On June 9, 2021, Solana Labs, the developer of the Solana blockchain, completed a private token sale raising $314.15 million, led by Andreessen Horowitz (a16z) and crypto-focused venture capital firm Polychain Capital.

In its charges against the exchanges, the SEC asserts that the token of the Solana blockchain, SOL, is an unregistered security.

On October 26, 2021, Samsung invested in the blockchain gaming unicorn Axie Infinity. The SEC states that the native token of Axie Infinity, AXZ, is an unregistered security.

One of the oldest crypto partnerships took place on February 20, 2020, when Barcelona Football Club (Barça) announced a global partnership agreement with blockchain-based sports and entertainment fan interaction platform Chiliz. Through Chiliz's fan voting and reward platform,, fans could interact with Barça in an innovative way, using digital assets called Barça Fan Tokens to participate in a variety of surveys and voting related to the club's daily activities.

The SEC asserts that the native token of the Chiliz blockchain, CHZ, is an unregistered security.

In addition, the SEC lawsuit alleges that the native token of the Polygon blockchain, MATIC, is an unregistered security. The Polygon blockchain has launched several partnerships over the past few years.

On October 18, 2021, Polygon announced a strategic blockchain agreement with sports betting company DraftKings, stating that online payment processing company Stripe will be the first to support payment with the dollar-pegged stablecoin USDC, with payments being made through the Polygon network. The network was chosen for its low costs, fast speed, integration with the Ethereum blockchain, and compatibility with multiple wallets.

On January 20 of last year, Adidas and Prada collaborated with Polygon Studios to develop an NFT project on the Polygon network, featuring user-generated and owned art.

On September 12 of last year, Starbucks announced the launch of Starbucks Odyssey, a new experience supported by Web3 technology, which offers Starbucks Rewards members and Starbucks partners and employees in the U.S. the opportunity to earn and purchase digital collectibles. Starbucks stated that it will use the Proof of Stake (PoS) blockchain technology developed by Polygon, which consumes less energy than the first-generation PoS blockchain.

On November 10 of last year, Polygon announced a collaboration with Disney to develop a proof of concept for a unique digital collectible that can verify the identities of Disney employees on special occasions.

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