On Monday, the SEC filed a lawsuit against influencer Ian Balina for failing to register cryptocurrencies as securities prior to the ICO in 2018. In the application, the SEC noted the ETH sent to Balina was “validated by a network of Nodes on the Ethereum blockchain, concentrated primarily in the US.” It then came to the conclusion that the transactions took place in the United States.
There it is
The supermassive black hole sized bad take at the heart of the Balina filing
h/t @LordBogdanoff https://t.co/ZopOGQchU4 pic.twitter.com/ucn5sZkK5b
— laurence (@functi0nZer0) September 19, 2022
SEC said that since more Ethereum nodes currently operate in the U.S. than in other countries, all Ethereum transactions globally should be considered to be originating in the U.S. Currently, 45.85% of all Ethereum nodes operate in the US. It was followed in Germany, with 19%.
University of Kentucky law professor Brian Fyre says:
“Saying that allows [the SEC] to describe doing business on the Ethereum blockchain, just like doing business on a U.S. stock exchange. This, from the perspective of their management, is convenient. It makes things a lot simpler.”
If the SEC classifies operations on the Ethereum blockchain as similar to operations on U.S. stock exchanges, then the regulator will issue a jurisdictional requirement for all activity on the Ethereum network. That would increase the SEC’s power to oversee both Ethereum and cryptocurrencies in general.
Last week, after the successful Ethereum Merge, SEC Chairman Gary Gensler stated that the upgrade could bring the network closer to the government’s definition of securities.