An idea has emerged at Solana (SOL) to shake off prosecution by the U.S. Securities and Exchange Commission (SEC) through a hard fork. Developers reject the proposal, which comes from some investors.
Solana (SOL) has been hit particularly hard by the wave of lawsuits from the U.S. Securities and Exchange Commission (SEC), with major neobroker Robinhood, for example, already listing the altcoin. To avoid protracted legal battles, a suggestion has been made from the Solana community by Twitter user Caps to reposition SOL through a hard fork. This would pacify the SEC and at the same time ensure that the legacy issues from the FTX insolvency of late 2022 disappear from Solana’s books, Caps holds out the prospect.
Technologically, the idea behind the push is that a majority of Solana’s network points and investors agree to keep SOL running on a modified blockchain. This could effectively invalidate the roughly 8 percent of all SOL still stored at Alameda Reseach, which was part of the defunct FTX empire. At the same time, Solana might be rid of the concern that the close ties to FTX and Sam Bankman-Fried would be considered an investment contract by the SEC and that SOL would therefore constitute a security subject to regulation (“securities”). Wide-reaching Twitter users like DSentralized like the unconventional initiative.
On the other hand, more prudent investors like Bardy or SOL Big Brain protest. They argue: Such a hard fork in Solana would undermine confidence forever because it would seemingly be designed to exclude a single large investor. If such a precedent existed, investors would always have to fear in the future that the basic crypto principle of neutral decentralization would not be respected at Solana. Solana developers, for whom Matías Kudelski went on record, are also thinking along these lines: In his team of more than ten employees, no one is seriously thinking about a hard fork for SOL, and the issue does not play a role in the Discord server for specialists either.
Conclusion: Solana’s past becomes a burden in the dispute with the SEC
If one follows the discussion about a possible hard fork at Solana, it quickly becomes clear: The populist proposal will not find support from developers and serious investors, because it is likely to backfire for SOL in the medium and long term. Thus, it is becoming apparent that Solana will have to continue to live with the fact that the previously celebrated support from the FTX empire now offers unpleasant targets. Even as the scale and impact of the FTX bankruptcy emerged in November 2022, Solana co-founder Raj Gokal had called the situation a “critical moment.” Now, the Solana Foundation is expected to be in demand in the clinch with the SEC, and it has already registered opposition. But if crypto exchanges in the U.S. also decide to delist SOL as a precaution, Solana’s price curve could plummet further.