Filecoin price drops after SEC request FIL-trust application to be withdrawn

May 18, 2023
The U.S. Securities and Exchange Commission (SEC) has requested Grayscale to withdraw the Filecoin (FIL) Trust registration application due to the fact that FIL is a security.
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Grayscal experts disagree with the position of the regulator and intend to immediately respond to the SEC on the legal justification of the company’s position.

Currently, the experts of the investment company cannot make any predictions about the correctness of the statement. It is possible that Grayscal will have to look for options for registering a trust in accordance with the Investment Companies Act of 1940 or suspend the project.

Grayscale said in April this year that the SEC’s corporate finance and law enforcement departments had asked for an analysis of securities legislation in relation to FIL. In turn, the SEC representative did not comment on this information. At the same time, Grayscale employees acknowledge that FIL may be a security based on existing facts or recognized by the SEC as such in accordance with federal securities laws.

According to CoinGecko, against the background of recent events, the FIL price fell by almost 3% (15 cents), and then recovered slightly. At the time of publication of the article, the asset is trading at $4.

This situation demonstrates the SEC’s close attention to digital assets. The chairman of the U.S. Securities and Exchange Commission, Gary Gensler, has repeatedly stated that most cryptocurrencies are securities. However, this position is fundamentally different from the position of the crypto industry, including Grayscale.

Issuers of securities must register with the SEC and regularly provide reporting information. Since 2017, the Securities and Exchange Commission has been struggling with projects that attract investment through initial coin offerings (ICOs). In this regard, many companies are forced to close and return funds to investors. Recall that Filecoin raised $200 million through ICO.