In order to prove whether or not a crypto is a security, the SEC relies on precedent set by the US Supreme Court in 1946 (specifically, SEC v. W. J. Howey Co).

The so-called Howey test holds that an “investment contract” amounts to a security if three conditions are met: (1) there’s an investment of money; (2) the investment is made in a common enterprise; and (3) there’s an expectation that profits will be derived from the efforts of others.

If the token is relatively centralized, and or the team behind it has made claims about their ability to drive up its price, then the Howey test is likely to be passed.

Crucially, none of that applies to bitcoin – the world’s most decentralized digital asset, with a market cap nearly equal to all other cryptos combined, whose founder neither pre-mined any coins nor has any ongoing involvement in the project – and the SEC knows it.

“We believe every [edit] asset other than bitcoin is a scam,” the SEC supposedly told Coinbase before filing its litigation, according to paraphrased remarks by Brian Armstrong, the exchange’s chief executive.