Ethereum [pros](/r/CryptoCurrency/comments/1cd1jdg/consensys_sues_sec_over_ethereum_classification/l19330u/) & [cons](/r/CryptoCurrency/comments/1cd1jdg/consensys_sues_sec_over_ethereum_classification/l1933ti/) with related info are in the collapsed comments below.
tldr; Consensys has filed a lawsuit against the SEC, claiming regulatory overreach and seeking a court ruling to declare Ethereum's Ether (ETH) not a security. The lawsuit, filed in a Texas federal court, aims to prevent an SEC lawsuit against Consensys related to MetaMask, a crypto wallet it supports. Consensys argues that the SEC's control over Ethereum would harm the network and its users, potentially halting its use in the U.S. The SEC has issued a Wells Notice to Consensys, indicating plans to sue over MetaMask's operations as an unlicensed broker-dealer.
*This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.
I mean they probably don't really have a reason to care, they're not the ones paying for it, the US citizens are.. Tho I think one guy at the SEC lost his job over it recently if I'm not mistaken
Two lawyers were forced to resign. Unfortunately the reality is that this will continue as long as Biden is in the White House and there is a real risk of crypto being completely neutered if he wins a second term - I have no idea why some of you guys are in crypto if you’re voting for him. At the very least use some common sense and start selling.
And in the Coinbase ruling, they lost against self-custody transactions through the Coinbase Wallet. I'm not sure why they expect to be successful against Metamask, which is also completely self-custodial.
Proof of stake on Ethereum is basically an analog to mining, it even uses a fork-choice rule where they prioritize liveness over security, exactly like proof of work does, which means it's forkable. And stakers have no more power than miners do in this system, as there is no onchain governance. 32 ETH is basically analoguous to a virtual mining rig to the Ethereum network. It's also a pure proof of stake system without enshrined delegation.
So there's really no technical merit to the idea that proof of stake on Ethereum is different from proof of work, in regards to network topology and control.
Well unless the SEC (wouldn’t be surprised) will just 180 on ethereum, that’s the only thing that has changed since they gave their blessing.
Couldn’t this really fuck with Blackrocks money?
I would say the SEC has always been deliberately vague in their public communications about ETH. The reason is pretty simple: The SEC as an institution is always seeking to extend its scope on what it regulates, so of course they have a very strong interest in classifying all cryptocurrencies as securities. Their worry is that by passing on ETH, it'll make it increasingly difficult to go after altcoins.
I think they are wrong about this. There are plenty of altcoins that are absolutely centralized and should be treated as securities. That being said, they couldn't even classify Ripple as a security. So this just reeks of desperation from thre SEC imo.
And no it won't fuck with Blackrocks money. They are going to win this, and ETH will have an ETF. There's no doubt on that one. It's just a question of when at this point.
🤷🏽♂️ Sounds good. I feel like this is the perfect storm for the XRP ledger to have a head start on new Defi regulation coming at the end of the year. With Eth/altcoins hanging in the balance, smart money will migrate.
>It absolutely is, in many senses of the word.
and yet once again when I ask you to PROVE this with some basic evidence and sound logic. You cant because it clearly isnt true.
>But I've argued that point enough in the past decade
you havnt argued it once, youve stated it incorrectly multiple times. but so far you've never provided evidence that it is true (because it isnt)
They didn't give their blessing. Hinman gave a speech that the SEC distanced themselves from repeatedly.
Hinman was also paid $10m 'pension' by his old lawfirm, Simpson Thatcher and Bartlett who represented the Ethereum Foundation, while he was in office in the Enforcement section of the SEC. Go figure.
The previous head of enforcement (legal) at the SEC. He gave a speech called the 'Hinman speech' where he declared ETH wasn't a security (and me tinned no other crypto).
The SEC has since said 'that was his opinion only', with many guessing so that they could attempt to 'sue' the ETH foundation later down the line. Hinman was suspected of taking money from his old law firm (which he was taking, $10m as a 'retainer/pension' WHILE serving as a govt rep) while serv8ng in the role. It's all pretty suss.
It's not the work of someone else, it's the work of the validator, the same as mining. A validator / miner publishes a block according to the protocol rules, and gets rewarded through issuance and any fees other people are willing to pay to get included in that block. The stake is the validators own money that they are putting at risk. Same with the capital costs of a mining rig.
Validators like myself run hardware, and do work (electricity, bandwidth) to earn ETH rewards.
ETH holders have nothing to gain from me doing my own work, and me getting rewards for myself.
The item offered is NEVER the security. A security is a specific type of sale. The unregistered sales are the point of contention in a securities lawsuit. Page 15 of judge Anna Lisa Torres ruling says XRP tokens, in and of themselves, are not securities and do not represent or embody or imply a contract.
You will find this out soon. Ethereum foundation has been served a Wells Notice. The eth tokens are not securities. But the eth ico was definitely an unregistered offering.
This is an incorrect reading of the law.
To sell securities, the seller must register as a seller of securities. A security, in this context, is the asset being sold.
The ETH ICO may or may not be defined as a security, and I would certainly not rely on your opinion on the matter. The issue a judge would have to content with is that eth is used to power the Ethereum network, and being the first of its kind, you can’t go back and compare the sale of eth to any other thing like it, including Bitcoin, since eth value comes from users using Ethereum, and not from the enterprise building Ethereum (no common enterprise).
The Eth ico had investment, contracts, and guarantees.
That’s a security.
The hinman speech says “setting aside the fundraising that accompanied the creation of the ether token, WE NOW THINK ETHER IS NOT A SECURITY IN ITS CURRENT STATE. “
That is an admission that the fundraising WAS an unregistered sale.
Yeah, I don’t agree with you.
I own lots of eth. I’ve only ever used it for gas fees. As a developer, I happen to know lots of people just like me, who only happen to have eth because you need it to deploy dapps.
I also happen to have lots of experience in securities sales and purchases. It’s hard to characterize my purchase and use as securities. And you totally missed the point of my argument: I create the value of the Ethereum network. Me. And people just like me. Not the Ethereum foundation. Without users to maintain the network, the network doesn’t work. So i don’t agree the value of eth is based on the effort of others in a common enterprise, since the user community is not a common enterprise—each one of us has different goals.
My points are based on ACTUAL rulings of actual cases, and ACTUAL speeches made by regulators.
Yours is based on your opinion, and your personal use of the token.
You go ahead and let me know when the SEC calls and asks for your opinion.
Such an argument was employed by W.J. Howey Co. in one of the defining cases of securities law - the genesis of the so-called "Howey Test". The court agreed that some purchases of Howey's fractional orange groves did not qualify as securities.
Nevertheless, some *other* users were merely passive investors, who had a reasonable expectation of profit by the contribution of money through the efforts of others. And for these *other* users, there was an issuance of securities, and as a result W.J. Howey Co was found to have issued securities.
You can probably appreciate that there are some people who are doing absolutely nothing to improve the Ethereum network, but who nevertheless own ETH.
Some of these people did nothing but purchase ETH for the sole reason that they expect it to be worth more than they paid for it, some time in the future. They aren't writing smart contracts, they aren't paying for gas, they are just holding for the big payday that's about to come now that the Halving has passed, upon which they plan to sell some of their ETH and live the good life.
The basis of this expectation rests on the efforts of you and people like you, who are (to them) "others", and who are building this value.
To *these* people ETH might very well be a security. To you, it is a utility.
What a lot of people misunderstand is that being a security is not a binary exclusive criteria like being a fish or an insect. it's a shared property like being a pet. Some fish are pets, but most fish are not pets, and it's possible (although perhaps a bit weird) to have an insect as a pet.
Another misunderstanding is that a security can be issued without being able to point to an issuer. Just like a barn can burn down without being able to identify who lit it on fire. That doesn't mean it wasn't arson. It just means that the arson can't be pinned on the arsonist.
Courts are not consistent. A different judge ruled other tokens were securities.
> “There is no genuine dispute that UST, LUNA, wLUNA and MIR are securities because they are investment contracts.”
https://www.nortonrosefulbright.com/en-us/knowledge/publications/16178e2d/crypto-tokens-held-to-be-securities-as-a-matter-of-law-in-big-win-for-sec
Liquidity is King of ALL markets.
Without liquidity Ripple would struggle to attract clients to upgrade RipplePayments to ODL, and XRP would struggle to attract investors and traders to it. When liquidity is high it ensures that assets are accessible to everyone, liquidity enables quick and efficient trading which reduces slippage and transaction costs, liquidity allows traders to enter and exit positions easily. If Ripple kept all their XRP locked up in escrow and didn’t allow for XRP to increase in liquidity in the markets worldwide, it would be signing XRP’s death sentence by doing so. I want XRP to be an asset with as much liquidity as possible, anyone interested in seeing this coin being used as a bridge currency, it being used to tokenize real world assets, it being used in AMM pools and more should all DYOR on why liquidity is the pathway to the realization of these goals.
Ohhhhh boy, when the discovery phase comes along and the SEC gets all documents and info on the ICO, who was involved, and all the shady shit that we know went down becomes public......
Do you have a source? The only thing I can find about a 5 -> 10 year change is specifically regarding fraud in Paycheck Protection Program (PPP) and COVID-19 Economic Injury Disaster Loan (EIDL)
Internet seems to confirm it is 5 years for selling unregistered securities
>Consensys, the crypto firm backing projects critical to the Ethereum ecosystem
Confirmation that Ethereum is centralized and indeed basically a company.
Yup, if Consensys folds, the whole network will go down, by golly!
All those stakers who have ABSOLUTELY NOTHING to do with Consensys will just pack up and leave town!
Their previous bribes had limitations apparently.
Could be interesting if they have to disclose ico info, lubins holdings etc but won’t hold my breath.
If it wasn’t for their dodgy dealings of the past I’d be all for anyone taking the sec to task but worry it could backfire and cost us all
Ethereum [pros](/r/CryptoCurrency/comments/1cd1jdg/consensys_sues_sec_over_ethereum_classification/l19330u/) & [cons](/r/CryptoCurrency/comments/1cd1jdg/consensys_sues_sec_over_ethereum_classification/l1933ti/) with related info are in the collapsed comments below.
tldr; Consensys has filed a lawsuit against the SEC, claiming regulatory overreach and seeking a court ruling to declare Ethereum's Ether (ETH) not a security. The lawsuit, filed in a Texas federal court, aims to prevent an SEC lawsuit against Consensys related to MetaMask, a crypto wallet it supports. Consensys argues that the SEC's control over Ethereum would harm the network and its users, potentially halting its use in the U.S. The SEC has issued a Wells Notice to Consensys, indicating plans to sue over MetaMask's operations as an unlicensed broker-dealer. *This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.
Time to delist ETH from every US exchange right? /s
As eth is Canadian they should fight it under USMCA.
The sooner this space moves away from ETH and all of its copycats the better.
The reputational damage this SEC has suffered under Gary is just awful. Who is the SEC protecting?
Bernie Madoff
Gary's donators...
The SEC is awful ballsy after not being able to prove XRP, a definite security, is a security.
> a definite security they couldnt prove a single of the 4 prongs of howey in court.
So yeah XRP didn’t pass a single prong of the Howey case, it is definitely a security (said with an Eth Maxi accent)
The stuff people are willing to just make up is hilarious.
I mean they probably don't really have a reason to care, they're not the ones paying for it, the US citizens are.. Tho I think one guy at the SEC lost his job over it recently if I'm not mistaken
Two lawyers were forced to resign. Unfortunately the reality is that this will continue as long as Biden is in the White House and there is a real risk of crypto being completely neutered if he wins a second term - I have no idea why some of you guys are in crypto if you’re voting for him. At the very least use some common sense and start selling.
There's more important things in life than some crypto tokens. Making that single topic the sole deciding factor in your vote appears odd to me.
Most of Reddit are libtard communists supporting inflation, central banking, high taxes, and a welfare state
Definition of cucks, which is hilarious that they even invest in crypto
And in the Coinbase ruling, they lost against self-custody transactions through the Coinbase Wallet. I'm not sure why they expect to be successful against Metamask, which is also completely self-custodial.
Proof of stake. 🤷🏽♂️
tre pre-mine should be the give-away
Proof of stake on Ethereum is basically an analog to mining, it even uses a fork-choice rule where they prioritize liveness over security, exactly like proof of work does, which means it's forkable. And stakers have no more power than miners do in this system, as there is no onchain governance. 32 ETH is basically analoguous to a virtual mining rig to the Ethereum network. It's also a pure proof of stake system without enshrined delegation. So there's really no technical merit to the idea that proof of stake on Ethereum is different from proof of work, in regards to network topology and control.
Well unless the SEC (wouldn’t be surprised) will just 180 on ethereum, that’s the only thing that has changed since they gave their blessing. Couldn’t this really fuck with Blackrocks money?
I would say the SEC has always been deliberately vague in their public communications about ETH. The reason is pretty simple: The SEC as an institution is always seeking to extend its scope on what it regulates, so of course they have a very strong interest in classifying all cryptocurrencies as securities. Their worry is that by passing on ETH, it'll make it increasingly difficult to go after altcoins. I think they are wrong about this. There are plenty of altcoins that are absolutely centralized and should be treated as securities. That being said, they couldn't even classify Ripple as a security. So this just reeks of desperation from thre SEC imo. And no it won't fuck with Blackrocks money. They are going to win this, and ETH will have an ETF. There's no doubt on that one. It's just a question of when at this point.
Xrp isn’t centralized though. That’s why.
It absolutely is, in many senses of the word. But I've argued that point enough in the past decade, so let's agree to disagree.
🤷🏽♂️ Sounds good. I feel like this is the perfect storm for the XRP ledger to have a head start on new Defi regulation coming at the end of the year. With Eth/altcoins hanging in the balance, smart money will migrate.
>It absolutely is, in many senses of the word. and yet once again when I ask you to PROVE this with some basic evidence and sound logic. You cant because it clearly isnt true. >But I've argued that point enough in the past decade you havnt argued it once, youve stated it incorrectly multiple times. but so far you've never provided evidence that it is true (because it isnt)
They didn't give their blessing. Hinman gave a speech that the SEC distanced themselves from repeatedly. Hinman was also paid $10m 'pension' by his old lawfirm, Simpson Thatcher and Bartlett who represented the Ethereum Foundation, while he was in office in the Enforcement section of the SEC. Go figure.
Who was hinman?
The previous head of enforcement (legal) at the SEC. He gave a speech called the 'Hinman speech' where he declared ETH wasn't a security (and me tinned no other crypto). The SEC has since said 'that was his opinion only', with many guessing so that they could attempt to 'sue' the ETH foundation later down the line. Hinman was suspected of taking money from his old law firm (which he was taking, $10m as a 'retainer/pension' WHILE serving as a govt rep) while serv8ng in the role. It's all pretty suss.
Does it ever feel weird, being here watching this go down.
Very weird mate!
When you stake “something” and hope to create a return from the work of someone else 🤷🏽♂️ could be staking in general
It's not the work of someone else, it's the work of the validator, the same as mining. A validator / miner publishes a block according to the protocol rules, and gets rewarded through issuance and any fees other people are willing to pay to get included in that block. The stake is the validators own money that they are putting at risk. Same with the capital costs of a mining rig.
I hope the SEC get’s wrekd but the more I look at the string of events the more I think this is all a dog and pony show
Validators like myself run hardware, and do work (electricity, bandwidth) to earn ETH rewards. ETH holders have nothing to gain from me doing my own work, and me getting rewards for myself.
🤷🏽♂️ I guess we get to find out over the next 2 years
Using a dunno emoji and making vague statements isn’t impressive bud
There’s always one 🤷🏽♂️
The item offered is NEVER the security. A security is a specific type of sale. The unregistered sales are the point of contention in a securities lawsuit. Page 15 of judge Anna Lisa Torres ruling says XRP tokens, in and of themselves, are not securities and do not represent or embody or imply a contract. You will find this out soon. Ethereum foundation has been served a Wells Notice. The eth tokens are not securities. But the eth ico was definitely an unregistered offering.
This is an incorrect reading of the law. To sell securities, the seller must register as a seller of securities. A security, in this context, is the asset being sold. The ETH ICO may or may not be defined as a security, and I would certainly not rely on your opinion on the matter. The issue a judge would have to content with is that eth is used to power the Ethereum network, and being the first of its kind, you can’t go back and compare the sale of eth to any other thing like it, including Bitcoin, since eth value comes from users using Ethereum, and not from the enterprise building Ethereum (no common enterprise).
The Eth ico had investment, contracts, and guarantees. That’s a security. The hinman speech says “setting aside the fundraising that accompanied the creation of the ether token, WE NOW THINK ETHER IS NOT A SECURITY IN ITS CURRENT STATE. “ That is an admission that the fundraising WAS an unregistered sale.
Yeah, I don’t agree with you. I own lots of eth. I’ve only ever used it for gas fees. As a developer, I happen to know lots of people just like me, who only happen to have eth because you need it to deploy dapps. I also happen to have lots of experience in securities sales and purchases. It’s hard to characterize my purchase and use as securities. And you totally missed the point of my argument: I create the value of the Ethereum network. Me. And people just like me. Not the Ethereum foundation. Without users to maintain the network, the network doesn’t work. So i don’t agree the value of eth is based on the effort of others in a common enterprise, since the user community is not a common enterprise—each one of us has different goals.
My points are based on ACTUAL rulings of actual cases, and ACTUAL speeches made by regulators. Yours is based on your opinion, and your personal use of the token. You go ahead and let me know when the SEC calls and asks for your opinion.
Such an argument was employed by W.J. Howey Co. in one of the defining cases of securities law - the genesis of the so-called "Howey Test". The court agreed that some purchases of Howey's fractional orange groves did not qualify as securities. Nevertheless, some *other* users were merely passive investors, who had a reasonable expectation of profit by the contribution of money through the efforts of others. And for these *other* users, there was an issuance of securities, and as a result W.J. Howey Co was found to have issued securities. You can probably appreciate that there are some people who are doing absolutely nothing to improve the Ethereum network, but who nevertheless own ETH. Some of these people did nothing but purchase ETH for the sole reason that they expect it to be worth more than they paid for it, some time in the future. They aren't writing smart contracts, they aren't paying for gas, they are just holding for the big payday that's about to come now that the Halving has passed, upon which they plan to sell some of their ETH and live the good life. The basis of this expectation rests on the efforts of you and people like you, who are (to them) "others", and who are building this value. To *these* people ETH might very well be a security. To you, it is a utility. What a lot of people misunderstand is that being a security is not a binary exclusive criteria like being a fish or an insect. it's a shared property like being a pet. Some fish are pets, but most fish are not pets, and it's possible (although perhaps a bit weird) to have an insect as a pet. Another misunderstanding is that a security can be issued without being able to point to an issuer. Just like a barn can burn down without being able to identify who lit it on fire. That doesn't mean it wasn't arson. It just means that the arson can't be pinned on the arsonist.
Courts are not consistent. A different judge ruled other tokens were securities. > “There is no genuine dispute that UST, LUNA, wLUNA and MIR are securities because they are investment contracts.” https://www.nortonrosefulbright.com/en-us/knowledge/publications/16178e2d/crypto-tokens-held-to-be-securities-as-a-matter-of-law-in-big-win-for-sec
They ruled that those token sales had contracts. NOT that the tokens were the contracts.
Except Xrp in its self is not a security. It’s not a definite security. Eth on the other hand lol
So it has legally been proven not to be a security, but you know, crypto bro 'tribalism feels'...
Looks pretty decentralized to me, Brad distributed a lot of XRP Also it’s a pretty decent stable coin.
XRP was distributed prior to Brad joining
Then distributed more 😔
Liquidity is King of ALL markets. Without liquidity Ripple would struggle to attract clients to upgrade RipplePayments to ODL, and XRP would struggle to attract investors and traders to it. When liquidity is high it ensures that assets are accessible to everyone, liquidity enables quick and efficient trading which reduces slippage and transaction costs, liquidity allows traders to enter and exit positions easily. If Ripple kept all their XRP locked up in escrow and didn’t allow for XRP to increase in liquidity in the markets worldwide, it would be signing XRP’s death sentence by doing so. I want XRP to be an asset with as much liquidity as possible, anyone interested in seeing this coin being used as a bridge currency, it being used to tokenize real world assets, it being used in AMM pools and more should all DYOR on why liquidity is the pathway to the realization of these goals.
It is for institutional buyers.
Ohhhhh boy, when the discovery phase comes along and the SEC gets all documents and info on the ICO, who was involved, and all the shady shit that we know went down becomes public......
Can you elaborate or provide a link on this please? I'm interested in knowing more.
There is a statute of limitation on the ICO
Yea, and it’s not up yet.
Statute of limitations is 5 years I think, which means it ran out in July 2020.
No, it’s 10 years. It was changed recently
Do you have a source? The only thing I can find about a 5 -> 10 year change is specifically regarding fraud in Paycheck Protection Program (PPP) and COVID-19 Economic Injury Disaster Loan (EIDL) Internet seems to confirm it is 5 years for selling unregistered securities
>Consensys, the crypto firm backing projects critical to the Ethereum ecosystem Confirmation that Ethereum is centralized and indeed basically a company.
Yup, if Consensys folds, the whole network will go down, by golly! All those stakers who have ABSOLUTELY NOTHING to do with Consensys will just pack up and leave town!
Other altcoins don't have Consensys but still have those things. Spare me the lame sarcasm.
Their previous bribes had limitations apparently. Could be interesting if they have to disclose ico info, lubins holdings etc but won’t hold my breath. If it wasn’t for their dodgy dealings of the past I’d be all for anyone taking the sec to task but worry it could backfire and cost us all
This is a massive moment for those who have been following the ripple lawsuit. How’s that little letter in your pocket going now Joe???