Cosmos Hub contemplating legal hire following SEC probe
The proposal was prompted partly due to the SEC naming ATOM, Cosmos Hub’s native token, a security in the Binance lawsuit
Satheesh Sankaran/Shutterstock modified by Blockworks
Following the SEC’s decision to sue Binance and Coinbase, a proposal to hire a lawyer for the Cosmos Hub has been drafted as a potential precaution.
The move was prompted, at least in part, by the SEC naming the Cosmos Hub’s native token ATOM as a security.
In the draft proposal, a pseudonymous Cosmos community member RoboMcGobo noted the allegations in the Binance lawsuit could potentially have severe, and more broad, consequences.
“If any of the allegations in the Binance lawsuit require a threshold determination by the court that ATOM is a security, the court’s decision may have far-reaching impacts on the Cosmos Hub and, naturally, the ATOM token,” RoboMcGobo said.
If that kind of precedent pans out, the Cosmos Hub would not have much of an opportunity to mount its own defense. As a result, the thinking is that the Hub should consider hiring a lawyer or law firm able to provide legal advice in worst-case scenarios.
“Having an attorney on standby for such an opportunity can only benefit us in ensuring that the Hub’s voice is heard in a case [that] could potentially decide its fate,” they said.
Cosmos community member Jacob Flowers said that although the SEC has not asked the court to prove ATOM or any of the other listed cryptocurrencies are securities, part of its case against Binance will be to prove that the centralized exchange had sold securities.
“The SEC is going to have to prove that at least one of the cryptocurrencies that they list is a security,” Flowers said.
Although he does not believe the Hub itself may need to find a lawyer, the interchain foundation which was involved in the initial creation of ATOM could benefit from an evaluation from a securities attorney.
Still, there were concerns that hiring a lawyer could bring forward centralization and regulatory concerns.
The concerns were fielded in short order by a community member that goes by the pseudonym Lil_D, who noted that although legal reviews and attorneys are inefficient, they also bring forward security for projects.
“It weakens the value proposition of $ATOM and the Hub to be exposed to potential enforcement actions, far more than the potential value accrual of “moving fast and breaking things,” they said.
The proposal is currently in its draft stages and has not been put up for a community vote.
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