Disruptive shortcut. In the main document of her lawsuit against a collision in a court in Texas, the Securities and Exchange Commission (SEC) that transactions in ETH automatically fall under the jurisdiction of US authorities. His main argument: most Ethereum network nodes are located on US soil.
SEC vs. Ian Balina: common law versus common ICO
A priori, the trial between CSS and Ian Balina is nothing special.
Active Youtuber, Balina rose to fame during the height of the ICO-mania of 2017-2018. On his YouTube channel, he promoted several pre-sale projects – including the SPRK. Token he raised an investment pool for via Telegram in 2018.
Arrested by the patrol, Balina made himself known on Twitter indicating that the ” fancy fillers of the controller would create a a harmful precedent for venture capital that supports the crypto industry – calling for his participation in the SPRK ” investment at a discount “.
Excited to take this fight public.
This frivolous SEC charge sets a bad precedent for the entire crypto industry.
If investing in a private sale at a discount is a crime, the entire crypto VC space is in trouble.
Refused to settle so that they prove themselves. 💯 pic.twitter.com/lVaqnnsLgT
— Ian Balina (@DiaryofaMadeMan) September 19, 2022
Except the CSS doesn’t see it that way. By concealing her connection to the project, Balina allegedly violated securities law. In the document (see image below), we also learn that theSPRK’s ICO successfully raised $30 million with 4,000 investors. And that Balina, through the funds collected on his Telegram pool, was interested up to 30%…
Ethereum: an “American” network for the SEC
There is an interesting place in the SEC complaint document on page 16:
“The American investors in the Balina pool irrevocably committed themselves to the transaction when, from the United States, they sent their contributions in ETH to this pool. In addition, their ETH contributions are validated by a network of nodes on the Ethereum blockchain, which is more closely concentrated in the United States than in any other country. Accordingly, these transactions took place in the United States. »
Not false : most Ethereum nodes are actually located in the United States. Of 7819 nautical miles, 3340 are located on American soil, or 42.56%.
It’s not entirely true either: Proof-of-stake (PoS) blockchain nodes are often cloud hosted, at services such as Google Cloud, Amazon Web Services or Microsoft Azure. An operator physically located in Lyon or Paris has every opportunity to verify its installation, so that it is located in the United States.
Due to the lack of statistics on the nodes no counter-argument can be made. However, the information should not be taken out of its context, namely a legal argument in the context of a dispute. controller – operator.
After The Merge, a change in the nature of Ethereum?
Until now Ethereum and Bitcoin were not worried, the SEC considering ETH as utility tokens (“ utility signs ”) and BTCs like real commodities (“ commodities “).
Discriminations with variable geometry, which in particular lead to a lawsuit against the project Ripple (XRP), referred to as crypto-security (“ security token “) in a lawsuit that has been ongoing since November 2020.
If the passage is worrying, it also follows the recent statements made by the chairman of the SEC, Gary Gensleron cryptocurrencies and staking.
In an interview with The Wall Street Journal, Gensler said that it is likely that cryptocurrencies and intermediaries that offer their holders staking reclassification as investment contracts on transferable securities (“ securities “). Instruments are clearly regulated by the SEC.
Without the speech that focuses on a specific cryptocurrency, it is nevertheless difficult not to see the danger for all cryptocurrencies as a proof in question, starting with Ethereum post-The Merge.
It should also be seen as an attempt to the stuck with the principles of loan. Remember that lending platforms have to register with the SEC. We reported to you last February that the platform was BlockFi he was fined $100 million for failing to do so.
Security Where utilities, Ethereum has been playing for the past few days to fear each other after its successful merger. Support at $1200 has been seen for ETH, again fueling liquidation risks on various DeFi platforms (MakerDAO). L’ETHW Meanwhile, ETHPoW received a rival faction token, 35% in 24h.