Ondo Finance Says Biden-Era SEC Investigation Closed With No Charges

Ondo Finance said on Monday that tokenization’s future looks brighter in the U.S., following the Securities and Exchange Commission’s closure of a years-long probe into its business.

The regulator had spent years scrutinizing how the Ethereum-based decentralized finance platform creates blockchain-based representations of real-world assets, and whether the project’s ONDO token resembled a security, according to a blog post.

Ondo said that the investigation, which was “initiated under the Biden administration during a period of heightened scrutiny of digital-asset firms,” was closed without any charges. Decrypt reached out to the SEC to confirm the move, but did not immediately receive a response.

In 2024, when Ondo said the inquiry began, the SEC was led by then-Chair Gary Gensler. At the time, Ondo said it was one of the only firms focused on tokenizing equities at scale, following its creation of a platform for digital representations of U.S. Treasuries.

Ondo said that it cooperated throughout the investigation. But ultimately, the company felt that it was “not a justified target,” emphasizing its focus on building regulated financial products with “some of the safest assets in traditional finance.”

Ondo’s token, which allows holders to vote on proposals, changed hands around $0.47, a 3.7% increase over the past day, according to CoinGecko. Over the past year, the token’s price has fallen 77%, following a peak of $214 set last December.

Ondo issues over 100 tokenized assets, according to RWA.xyz. As of Monday, its fund of short-term U.S. debt was the largest at $774 million.

The company highlighted how the SEC’s stance on tokenization has shifted since Gensler’s resignation, which followed U.S. President Donald Trump’s re-election. Famously, Gensler clashed with Rep. Ritchie Torres (D-NY) in 2023 over whether a Pokémon card could be considered a security if it was represented by a token on a blockchain.

Not long after his appointment in 2021, Gensler said cryptocurrencies that function as synthetic representations of a traditional stock were implicated by securities laws. However, the SEC and Commodity Futures Trading Commission had targeted issuers of such digital assets before.

From Coinbase to Ripple, the SEC pressed forward with several lawsuits under Gensler’s leadership that accused companies of flouting securities laws. So far this year, the SEC has officially dropped over a dozen inquiries and lawsuits.

Still, tokenization has become a formal part of the SEC’s agenda, with Chair Paul Atkins proposing on Fox Business last week that financial markets could shift entirely to blockchain-based systems within the next couple of years.

“The trouble that we’ve seen here over the past few years is that the SEC historically was never necessarily at the vanguard of pushing innovations,” he said.

In September, the Nasdaq asked the SEC for a rule change that would allow it to record stocks in tokenized form. Months before, SEC Commissioner Hester Peirce highlighted the agency’s associated focus, arguing that “tokenization cannot reach its full potential without legal clarity.”