• When asked if Ethereum is security, SEC Commissioner Gary Gensler stumbles

  • According to Twitter user @NeilJacobs, when asked about Ethereum’s securities status, Securities and Exchange Commission (SEC) Chairman Gary Gensler refused to answer.

    “BREAKING: SEC Chairman Gary Gensler refused to comment on whether Ethereum qualifies as a security under the Howey Test because it is controlled by so few people.”

    Since the US Securities and Exchange Commission filed a lawsuit against Ripple over allegations that it sold unregistered securities, the issue of Ethereum’s status has also come to light.

    Former SEC Director William Hinman stated in 2018 that Bitcoin and Ethereum are not securities. In terms of securities compliance, this essentially gave both the go-ahead to operate unhindered.

    However, in the ongoing SEC vs. Ripple case, the SEC’s arguments are unraveling, including Hinman’s previous “ruling” on Ethereum.

    What is at stake is demonstrated by Gensler’s refusal to answer the question posed.

    Is Ethereum a safe investment?

    The defense team in the SEC vs. Ripple case claims that Ripple believed XRP, along with Bitcoin and Ether, were not securities. And the SEC’s failure to provide fair notice otherwise reinforced this belief.

    A significant part of this argument is based on Hinman’s previous endorsement of Bitcoin and Ether. Ripple claims that the similarities between all three led them to believe that XRP is not a security.

    As the case progressed, Ripple’s legal team sought to establish equivalency between the cryptocurrencies by requesting SEC documents. Which they have thus far failed to deliver.

    In a further twist, Judge Netburn approved Hinman’s deposition last month. That is, he must testify in court on the subject.

    In response, Hinman filed an affidavit stating that his 2018 speech was not the SEC’s position, but rather an expression of his personal opinion. As a result, Ethereum and Bitcoin are not necessarily securities compliant.

    Ripple CEO Brad Garlinghouse commented on the absurd turn of events, claiming that the SEC’s retreat only muddies the regulatory waters.

    “Bill Hinman stated in 2018 that ETH is not a security, and Jay Clayton agreed. However, Hinman recently filed a sworn affidavit in court stating that the SEC has “not taken any position or expressed a view” on ETH’s status… So, how is the market supposed to be clear?”

    The SEC Wants More Power Over Cryptocurrency

    This week, Gensler has been speaking at the Aspen Security Forum in Colorado. During the event, Gensler advocated for additional powers to protect investors from the “Wild West” of cryptocurrency.

    According to Gensler, this asset class is rife with “frauds, scams, and abuse in certain applications.” He went on to say that the sector was only catching on as a way to get around the law.

    “There is a lot of hype and spin surrounding how crypto assets work. In many cases, investors are unable to obtain rigorous, balanced, and comprehensive information… I am concerned that if we do not address these issues, many people will be harmed.”

    Gensler has previously attempted to distance himself from the Ripple case, claiming that it is ultimately up to the courts to decide.

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