Legal Definitions of Crypto Assets and Crypto Trading Platforms
by SEC vs. the WorldSeptember 14th, 2023
Too Long; Didn't Read
This section provides valuable insights into crypto assets and blockchain technology. Crypto assets, often referred to as cryptocurrencies or digital coins, are issued and transferred using blockchain or distributed ledger technology. Blockchain is a secure, decentralized database spread across a network of computers that records unchangeable transaction data. Some crypto assets are native to specific blockchains, while others can exist on multiple blockchains. Owners manage crypto assets using crypto wallets, which store public and private keys. The public key acts as a user's blockchain address, while the private key functions as a password to transfer assets. The security of these assets depends on the type of wallet, with "hot wallets" connected to the internet being more vulnerable to certain hacks than "cold wallets" disconnected from the internet. Understanding these fundamentals is crucial in the world of crypto trading.
SEC v. Binance Court Filing, retrieved on June 5, 2023 is part of HackerNoon’s Legal PDF Series. You can jump to any part in this filing here. This is part 11 of 69.
BACKGROUND
II. BACKGROUND ON CRYPTO ASSETS AND CRYPTO TRADING PLATFORMS
A. Crypto Assets
62. As used herein, the terms “crypto asset,” “digital asset,” or “token” generally refer to an asset issued and/or transferred using blockchain or distributed ledger technology, including assets referred to colloquially as “cryptocurrencies,” “virtual currencies,” and digital “coins.”
63. A blockchain or distributed ledger is a database spread across a network of computers that records transactions in theoretically unchangeable, digitally recorded data packages, referred to as “blocks.” These systems typically rely on cryptographic techniques to secure recording of transactions.
64. Some crypto assets may be “native tokens” to a particular blockchain—meaning that they are represented on their own blockchain—though other crypto assets may also be represented on that same blockchain.
65. Crypto asset owners typically store the software providing them control over their crypto assets on a piece of hardware or software called a “crypto wallet.” Crypto wallets offer a method to store and manage critical information about crypto assets, i.e., cryptographic information necessary to identify and transfer those assets. The primary purpose of a crypto wallet is to store the “public key” and the “private key” associated with a crypto asset so that the user can make transactions on the associated blockchain. The public key is colloquially known as the user’s blockchain “address” and can be freely shared with others. The private key is analogous to a password and confers the ability to transfer a crypto asset. Whoever controls the private key controls the crypto asset associated with that key. Crypto wallets can reside on devices that are connected to the internet (sometimes called a “hot wallet”), or on devices that are not connected to the internet (sometimes called a “cold wallet” or “cold storage”). All wallets are at risk of being compromised or “hacked,” but internet connectivity makes hot wallets easier to access and therefore puts them at greater risk from certain hacks.
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This court case 1:23-cv-01599 retrieved on September 6, 2023, from docdroid.net is part of the public domain. The court-created documents are works of the federal government, and under copyright law, are automatically placed in the public domain and may be shared without legal restriction.
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