SEC Makes Bizarre Claim About U.S. Jurisdiction Over Ethereum in Court Filing

Because the “majority” of validators are based in the United States, the Securities and Exchange Commission asserted in a court filing today that Ethereum transactions “take place” in the country. However, this assertion may not be supported by the evidence.

According to recent court documents from the Securities and Exchange Commission, since there are more Ethereum nodes in the U.S. than any other nation, Ethereum transactions should be seen as “taking place” within the U.S.

Charges against Ian Balina for an Unreported Promotion

A lawsuit was just filed by the Securities and Exchange Commission (SEC) against cryptocurrency YouTuber Ian Balina for allegedly failing to disclose the payment he got for endorsing Sparkster and its SPRK coin.

Balina is also facing charges from the SEC for failing to register with the agency before he sold some of his own SPRK tokens in his Telegram investment pool.

Between April and July 2018, Sparkster held an initial coin offering (ICO) for SPRK. Sparkster, a decentralized cloud network that was built on Ethereum, has not yet produced anything and is currently the target of a class-action lawsuit (which Balina joined). In a filing with the SEC, the Cayman Islands-based business admitted to offering unregistered securities to investors in the United States and abroad in order to raise more than $30 million.

However, despite the decentralized nature of the blockchain, SEC lawyers asserted in their court brief that Ethereum transactions should be regarded as coming from the United States.

The SEC and Cryptocurrency

While the Commodity Futures Trading Commission (CFTC), a U.S. regulatory body, has stated that Bitcoin should be classed as a commodity and come under its jurisdiction, SEC chair Gary Gensler has frequently reaffirmed his position that the majority of crypto tokens should be classified as securities.

Leading U.S. cryptocurrency exchanges, including Coinbase and Binance, are apparently being investigated by the SEC for listing these tokens. In July, the regulatory body stated that it was filing nine cases against nine separate ICO-era crypto companies for selling unregistered securities.

In the past week, Gensler’s tone has marginally changed. On September 15, Ethereum successfully switched from Proof-of-Work to Proof-of-Stake, which means that blockchain validators now serve as cryptocurrency miners’ replacements. By staking ETH, validators take part in the block production process and are rewarded for their efforts with more ETH tokens. A short time after the upgrade, Gensler said that the SEC might see a project’s cryptocurrency as a security because of at least one aspect of its consensus method. However, he avoided mentioning Ethereum by name.

Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.

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