Fun

SEC drops Ethereum investigation to avoid ‘embarrassing’ court case

News Feed - 2024-06-20 11:06:00

Daniel Ramirez-Escudero36 minutes agoSEC drops Ethereum investigation to avoid ‘embarrassing’ court caseGary Gensler’s SEC has halted its investigation into whether Ether is a security. What could have motivated the SEC withdrawal, and is the fight over?389 Total viewsListen to article 0:00Follow upOwn this piece of crypto historyCollect this article as NFTJoin us on social networksThe United States Securities and Exchange Commission’s (SEC) case to prove Ether is a security may not have been as strong as it let on.


On June 19, 2024, the SEC surprised the crypto industry when it officiallyclosed its investigation into whether Ether (ETH) is a security.


Consensys lawyer Laura Brookover said there will be “no more protestations from the SEC that Ether is a security.”


Brookover claimed that the SEC didn’t willingly decide todrop the investigation.


She said it was a reaction to being pushed to “lift the subpoenas on Consensys given their recent ETH [exchange-traded fund] rule change approvals predicated on ETH being a commodity.”Consensys letter to the SEC. Source: Consensys 


The letter from Consensys states that the SEC’s approval of spot Ether exchange-traded funds (ETFs) indicated that it had “updated its position to classify ETH as a commodity and not a security.” 


The SEC has not publicly confirmed Consensys’ thesis.ETF is no guarantee that Ether is a commodity


Carol Goforth, a professor at the University of Arkansas School of Law who specializes in business associations and securities regulation, told Cointelegraph that the SEC’s approval of a spot Ether ETF does not mean ETH is a commodity.


Goforth said that the “approval of an ETF has nothing to do with whether the underlying asset is a security.”


She added that there are already ETFs with commodities as the underlying asset:“Approval of an ETF has nothing to do with the appropriate classification of the underlying assets in which the fund invests.”


If the spot Ether ETF approval doesn’t necessarily force the SEC to demonstrate that ETH is a security, why did the SEC halt its investigation?Why did the SEC drop the investigation into Ethereum?


Goforth believes the SEC’s retreat is a “pretty good indication that the agency does not believe it can convince a court that ETH is a security.”


She suspects the SEC “concluded that it would be difficult to prove that ETH is a security under theHowey investment contract test because of how widely the asset is held and traded, and how much market forces dictate profitability.” She said that the SEC may have wanted to avoid a discomfiting defeat:“Previous statements made by SEC officials about the likely classification of Ether might have been embarrassing to an agency that claims classification is ‘clear.’”


In 2018, former SEC director William Hinmanstated that Ethereum was not a security.


In hisspeech, he mentioned that decentralization plays a key role in this determination. The network and its operations were sufficiently decentralized, meaning investors no longer expected a single entity to perform significant administrative efforts​.


Recent: Crypto clicker games need real token use cases to be sustainable


The speech suggested that Ethereum’s status as a non-security was clear, contrasting with the SEC’s ongoing scrutiny under Gensler.


The crypto industry’s main complaint is that theSEC has not consistently provided guidance on how the Howey test applies to Ethereum or other similar cryptocurrencies.The battle for U.S. crypto regulation is far from over


The crypto community may be happy that the SEC dropped its investigation.


Goforth said that it’s a “really positive development for the Ethereum network that the SEC is not currently trying to asses that ETH is a security.”


However, she said that the letter from the SEC only states that “at this time,” the SEC will not be continuing its investigation and that “this is not a final determination.”


Goforth believes “it is too early to say the industry is ‘winning’ given the lingering uncertainties over the appropriate classification of most crypto assets.”


Consensyshighlighted that despite this “momentous” victory, it’s not a “cure-all for the many blockchain developers, technology providers, and industry participants who have suffered under SEC’s unlawful and aggressive crypto enforcement regime.”Source: Joseph Lubin


Goforth claimed that the industry needs a “clear regulatory framework with which it is reasonably possible to comply” where purchasers can access accurate information, and industry participants can be held accountable for illicit activities.Source: Consensys


Consensys may have won the battle, but the war continues. The SEC is also scrutinizing staking, a core element of the Ethereum ecosystem.


American crypto exchange Kraken has already settled with the SEC for $30 million. The exchange stopped offering staking services after the commission alleged that its staking-as-a-service offering constituted a security.


Coinbase CEO Brian Armstrong has even said that the exchange will take the SEC to court over staking if necessary.


Recent: TXSE ‘upstart’ stock exchange could become a crypto-friendly challenger


Goforth said that staking is “definitely a more complex” topic where “the SEC has alleged that staking itself involves an investment contract.”


She remarked that the SEC’s “position can be taken regardless of whether the underlying crypto asset is itself a security.”


The ongoing struggle for a clear regulatory framework in the U.S. crypto industry continues to be challenging.


However, recent developments might offer Ethereum advocates a momentary respite from some of the uncertainties surrounding Ether’s classification, offering a glimmer of hope in an otherwise tumultuous regulatory landscape.# Government# Security# Ethereum# SEC# US Government# United States# Regulation# Ethereum ETF# ETFAdd reaction

News Feed

Solana traders chase $180 target after SOL gains 13% in 2-days
Marcel Pechman3 hours agoSolana traders chase $180 target after SOL gains 13% in 2-daysA surge in Solana network activity, memecoin prices and optimistic derivatives markets could be a sign that SOL is aiming for $180.15
Aave deploys DeFi protocol on BNB Chain
Ezra Reguerra10 hours agoAave deploys DeFi protocol on BNB ChainThe BNB Chain team said that Aave’s deployment on the network provides their community access to increased liquidity and new lending and borrowing options
PowerTrade Management Team Explains the Benefits of Automated Market Makers
PowerTrade Management Team Explains the Benefits of Automated Market Makers PowerTrade is an easy-to-use crypto options trading platform, enabling traders to maximize ROI through a
South African exchange VALR wins dual crypto licenses
Gareth Jenkinson10 hours agoSouth African exchange VALR wins dual crypto licensesVALR receives two licenses from South Africa’s Financial Sector Conduct Authority following new requirements for exchanges in the country
Jesse Coghlan3 hours agoYuga Labs confirms UV lights likely cause of eye issues at ApeFestThe Bored Ape Yacht Club’s official Twitter account said an investigation confirmed suspicions that UV lights were the likely ca
Book by Nigerian Author Reminds New Adopters Why Bitcoin Was Created
Book by Nigerian Author Reminds New Adopters Why Bitcoin Was Created Nigerian author and crypto advocate Nathaniel Luz has said his recently published book represents his attempt t
Tesla Holding Bitcoin Worth $2 Billion — Sees Crypto as Both Investment and Liquid Alternative to Cash
Tesla Holding Bitcoin Worth $2 Billion — Sees Crypto as Both Investment and Liquid Alternative to Cash Elon Musk’s electric car company, Tesla, has filed an annual report
Reports Indicate USDT Is Being Used in Venezuela to Facilitate Settlements and to Avoid Sanctions
Reports Indicate USDT Is Being Used in Venezuela to Facilitate Settlements and to Avoid Sanctions Some companies in Venezuela are using the stablecoin tether as a way of sidesteppi
Floki Inu warns of fake tokens on Solana and Base blockchains
Amaka Nwaokocha53 minutes agoFloki Inu warns of fake tokens on Solana and Base blockchainsFloki Inu urged its community to obtain token information only from official sources to prevent falling victim to these fraudulent
Ethereum Price Targets $3,000 As Analyst Calls It A ‘Powder Keg’
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Sergei Polunin Embraces the Future of Dance by Collaborating With Sensorium Galaxy in 3D Social Virtual Reality
Sergei Polunin Embraces the Future of Dance by Collaborating With Sensorium Galaxy in 3D Social Virtual Reality Sensorium Galaxy Is Rapidly Expanding24 April 2020, Los Angeles: Sens
Zhiyuan Sun6 hours agoDeSo offers $1M bounty for building decentralized RedditDevelopers pointed out the “monopolization of content and data” in centralized social media platforms as a reason to create a decentralize