Ethereum [pros](/r/CryptoCurrency/comments/1bjnjy1/sec_probing_crypto_companies_in_ethereum/kvu4rm4/) & [cons](/r/CryptoCurrency/comments/1bjnjy1/sec_probing_crypto_companies_in_ethereum/kvu4sa5/) with related info are in the collapsed comments below.
Confused ... isn't Blackrock in control of the price , if they really want?
They can't actually ... bu hu. MCap of Blackrock is 120bn ... Eth Mcap is way above that. (/s)
Plus Gary has already said on video that ETH is not a security:
[https://www.cryptotimes.io/2023/06/13/gensler-saying-eth-btc-is-not-security-video/](https://www.cryptotimes.io/2023/06/13/gensler-saying-eth-btc-is-not-security-video/)
> bitcoin pays mining rewards.
Energy must be expended to acquire mining rewards. Not so with eth dividends, which go to eth stakeholders for simply investing.
So yes, bitcoin mining company shares are securities, because they provide a dividend. Just like eth dividends.
> for simply investing.
Absolutely false. They are still doing the work of verifying the transactions, there just isn't an arbitrary difficulty added to it.
> > eth dividends, which go to eth stakeholders for simply investing.
> Absolutely false.
People who get those dividends disagree. They know exactly what staking is.
> They are still doing the work of verifying the transactions
And getting paid for it based upon how much they've invested. The rewards are even shared within a common enterprise.
> Ethereum provides "dividend" only if you are a validator.
True, but irrelevant. The issue is that there is an investment return as a result of the efforts of others. That's what makes it a security. Before the switch to proof-of-stake, it could be argued that mining is separate from ownership. That is no longer the case. Now dividends have a requirement of ownership of the security.
I don't know why all of this is a surprise really. This was all discussed for years before the decision to go to proof-of-stake.
> True, but irrelevant. The issue is that there is an investment return as a result of the efforts of others.
You don't get returns on ETH without running a validator, so your argument makes no sense.
If you were talking about liquid staking derivatives (like Lido's stETH) where you earn rewards but don't actually propose and attest to blocks then maybe that would be reasonable, but that just isn't how it works for ETH, you actually have to do the work to earn the rewards.
> You don't get returns on ETH without running a validator,
But you do get returns if you do run a validator, which makes it a security. It is literally the definition of one; Investment returns. The more you invest, the bigger the returns.
I really don't know why people are finding this surprising. It's not like this is something that people are recently learning.
What dividend?
Validators get rewards from two sources: fees from the execution layer (e.g. users paying for the block builder to include their transactions); and the consensus layer (e.g. attestation rewards for checking and voting on the validity of proposed blocks).
That's not a dividend, no one is doing the work for you... if you miss your attestations you don't earn the pay for making them, if you don't include a transaction in the block you build then you don't get the tips from their gas fee.
Do you think Bitcoin miners are earning 'dividend' just because they are running code that they didn't write themselves? Are block rewards a 'dividend' in your opinion?
"Note that in the future, it is likely that Ethereum will switch to a proof-of-stake model for security, reducing the issuance requirement to somewhere between zero and 0.05X per year."
It's been in the white paper since its inception.
The issue is who is collecting the dividend. In proof-of-work, money is invested in mining that returns a dividend in rewards, so if you're investing in proof-of-work mining, you're investing in a security. Just like proof-of-stake dividends.
Its not about proof of stake, Hedera is and the never named it a security. The Sec names some 50+ networks/ projects that it deemed were.
In ETHs case it likely more to do with the contracts they had during the changeover to PoS. That it is a security but was it traded as one for a while along with its initial funding.
> Its not about proof of stake
It clearly is to the SEC.
> According to a person at a company who received a recent subpoena request, the SEC’s probe of the Swiss-based Ethereum Foundation began shortly after the blockchain’s shift to a new governance model known as “proof-of-stake” in September 2022.
Clearly it not because the SEC already listed 50 odd cryptos they deemed securities and Hedera which is PoS was not one of them.
You can be sure they know all about Hedera and it wasnt an oversight either, because they registered their pre sales with them.
Its far more likely the SEC is taking issue with how they locked up tokens under contract during the change over.
Tokenization can and will happen on the Bitcoin network with less security hacks unlike with Ethereum.
Ethereum is a security. The pre-mine and staking prove it. https://x.com/excellion/status/1422789730601627651?s=46
“the token…all by itself is not a security, just as the orange groves in Howey were not.”
- SEC Director of Corporate Finance, Bill Hinman, speaking on Ethereum
Bill Hinman is being investigated for his conflicts of interests regarding that speech (and in general): [https://empowr.us/confirmed-sec-inspector-general-in-final-stages-of-investigation-on-crypto-conflicts-referred-by-empower-oversight/](https://empowr.us/confirmed-sec-inspector-general-in-final-stages-of-investigation-on-crypto-conflicts-referred-by-empower-oversight/)
Yes, but Hinman had a bit of a conflict of interest so I'm not sure the SEC would feel compelled by that in its current incarnation, especially since it's quietly deleted all mention of him from its site.
https://protos.com/former-sec-director-hinman-made-millions-from-a-pro-ethereum-firm-during-tenure/
Hinman was warned about meeting with ETH foundation pundits by the internal SEC audit and compliance team noting he was accepting millions of dollars in retainer/pension from his ex-law firm (Simpson Thatcher & Bartlett) who were pro-ETH. There are internal emails from the SEC team in the public sphere telling him explicitly that it was a conflict of interest, and he wasn't to get involved.
He then magically and serendipitously gave the 'Hinman speech' where he declared ETH wasn't a security, which has since been renounced by SEC as not being true and 'only his personal opinion.'
Hinman is a crook, and it is one of the most flagrant and blatant acts of corruption seen.
[And yet Gensler and the IG will probably find nothing in their internal investigation](https://www.crypto-law.us/confirmed-sec-inspector-general-in-final-stages-of-investigation-on-crypto-conflicts-referred-by-empower-oversight/). No wrongdoing whatsoever. Crooks always cover each others asses.
You're missing the quote from him where he says "disregarding past sales".... kind of important that, as they were securities sales.
Not only that, after that speech, ETH then became a token printing machine...
Yes yes of course they are going to deny the first pass, there will be a lot of back and forth, BlackRock will spend a ton of money on lawyers and eventually they are going to win. ETH ETF next year maybe
This is the sole reason, its complicated. Maybe the fact that they forked and changed to a staking currency matters but id imagine in the grand scheme of things they will say its a security.
I think the SEC might have said "too late to fix" if they had stayed as a proof-of-work asset. But when they switched to proof-of-stake, they essentially forced their hand.
I've been holding ETH since late 2016 and am thinking of selling for Bitcoin. I just cannot see how ETH isn't a security. The Ethereum Foundation is essentially a company with a salaried dev team and product roadmap for Ethereum. There was a pre-mine for the founders and they intervened during the DAO hack to return ETH. I think the move to PoS was a HUGE mistake as well since it now provide native yield. It seems more centralized and risky to me now than it ever has.
Also approving the ETH ETF will open up the floodgate of ETFs for hundreds of other centralized coins.
My plan was to see if I can get one more pump out of ETH this run and sell around $10k, but the idea of just selling it and holding untouchable Bitcoin is more appealing every day.
And it seems like this conversation gets downvoted everytime it’s brought up. In my mind, SEC wants to use ETH to balance the scales. To show that crypto doesn’t only go up. Like they want to bring down one player to show their power while in reality, there’s a reason why: the presale
I almost sold all my eth when I first heard this news. It’s about 10% of my portfolio.
the judge who ruled XRP case is a moron. SEC is licking their wounds.
Judge said some XRP tokens are securities and some other tokens are not.. LMAO.
SEC has to find out whose tokens are securities. lol.
Don't blame the wise Judge Torres for your inabilty to distinguish something other than black and white.
The ETH token by itself is not a security just as the XRP token isn't.
The Ethereum Foundation has certainly been involved in a a bunch of security violations for sure, though.
SEC claims XRP is a security: almost all USA exchanges delist, entire sub mocks Ripple for years and gets proven wrong in the end.
SEC claims ETH is a security: No exchange delisting's so far, entire sub using Ripples defense to form their legal opinion...
Kinda seems like Ripple told ya so, Maybe instead of all the dumb infighting between morons we should be supporting crypto as a whole... I dunno, crazy ideas I guess.
What does the first letter of SEC stand for?
also
https://www.coindesk.com/markets/2024/03/20/ether-tumbles-6-as-eth-etf-hopes-dim-amid-regulatory-probe-reports/#:~:
"Fortune said the SEC is examining whether ETH is a security."
What's the second letter?
There are ETF applications. They are doing due diligence.
Thanks for confirming there is no source of the SEC claiming ETH is a security.
Oh, so because you ninja edited your response, now you're going to use that as an insult when I reply to the initial one line comment.
>SEC is examining whether ETH is a security.
**Thanks for confirming there is no source of the SEC claiming ETH is a security.**
>Oh, so because you ninja edited your response, now you're going to use that as an insult when I reply to the initial one line comment.
did you fall on your head or? try reading when someone replys.
>Thanks for confirming there is no source of the SEC claiming ETH is a security.
Yeah Im sure the SEC just Subpoenas several companies to turn over documents and Financial records related to Eth foundation because its NOT interested in the Security status of ETH. it does it for "funzies". Cope
> did you fall on your head or? try reading when someone replys.
All you're doing is proving what a scumbag you are. You initially replied with only the one line about the first letter of the SEC. You quickly edited it with more stuff, but I had already seen and was replying to what you wrote.
The fact that you're lying about it now really shows you have no character.
> All you're doing is proving what a scumbag you are.
you asked question, I provided answer. ur now calling me a scumbag for some reason. Again are you delusional or did you fall on your head as a child?
> You initially replied with only the one line about the first letter of the SEC. You quickly edited it with more stuff, but I had already seen and was replying to what you wrote.
I did no such thing.
>The fact that you're lying about it now really shows you have no character.
the fact that you're randomly attacking me after providing the answer to your question directly shows you are a moron who clearly didnt read what was said to them. enjoy being wrong IDC
>I did no such thing.
You absolutely 100% did.
> after providing the answer to your question
You haven't even done that.
SEC issuing subpoenas ahead of an ETF != SEC claiming ETH is a security.
Actually u/noncognitive is right. This investigation has to do with the DAO hack years ago not its status as a security. There are ties of the ETH foundation to the hack and theft.
> There are ties of the ETH foundation to the hack and theft
lol where do you people come up with this shit?
Try pulling your head out of your ass and not believing every piece of bologna you come across.
You're twisting things a bit. It's more like: SEC sues Ripple Labs for securities violations while claiming that XRP itself is a security: almost all exchanges delist XRP.
SEC sues Ethereum Foundation for securities violations while claiming ETH itself is a security... hasn't happened yet, and you better hope it doesn't if you hold ETH.
> hasn't happened yet,
It has we the public just dont know about it yet. Again you dont put the Canary in your code base to Not make note of when it died and how it died. That Canary is the only reason we know about the SEC's subpoenas, as the parties involved are currently sworn to secrecy.
tldr; The regulatory status of Ether has long been a point of contention for the Securities and Exchange Commission. The regulatory status of Ether has long been a point of contention for the Securities and Exchange Commission.
*This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.
Part 1
The Securities and Exchange Commission is waging an energetic legal campaign to classify Ethereum, the second-most popular cryptocurrency, as a security, according to U.S. companies that have received subpoenas related to an investigation. The news delivers a further blow to the crypto industry’s hopes the agency will approve applications by [BlackRock](https://archive.is/o/ZNt54/https://fortune.com/company/blackrock/) and others for an Ethereum ETF following the SEC’s approval of a [series of Bitcoin ETFs](https://archive.is/o/ZNt54/https://fortune.com/crypto/2024/03/01/bitcoin-etfs-crypto-blackrock-fidelity-prices-high/) in January.The SEC’s Ethereum investigation involves demanding companies furnish any documents and financial records they may have regarding their dealings with the Ethereum Foundation, a nonprofit group that oversees the governance and development of the blockchain by the same name.According to a person at a company who received a recent subpoena request, the SEC’s probe of the Swiss-based Ethereum Foundation began shortly after the blockchain’s shift to a new governance model known as “[proof-of-stake](https://archive.is/o/ZNt54/https://fortune.com/crypto/2022/08/19/everything-to-know-about-the-ethereum-merge/)” in September 2022. Another person at a separate company that received a subpoena described it as narrow and focused on the Ethereum Foundation, and said they received the subpoena in the last few weeks.That proof-of-stake event moved the blockchain away from the energy-intensive model used by Bitcoin in favor of one that relies on a trusted network of validators—and provided the SEC with a new pretext to attempt to define Ethereum as a security, according to people at three different companies familiar with the subpoenas. The people asked *Fortune* not to identify identify them or their firms for fear of retaliation by the agency’s chair, Gary Gensler, whom one described as “vindictive.”The existence of an investigation into the Ethereum Foundation was reported on Wednesday by [*CoinDesk*](https://archive.is/o/ZNt54/https://www.coindesk.com/business/2024/03/20/ethereum-foundation-under-investigation-by-state-authority/), which cited an update to the group’s Github code repository that reportedly provided evidence of a probe by an unknown state agency.“The SEC does not comment on the existence or nonexistence of a possible investigation,” the agency said in response to a request for comment from *Fortune*.
Part 2
# A push to label Ethereum a security
The news of the subpoenas comes as the SEC and the Biden administration pursue an aggressive campaign to cut down the crypto industry, which they characterize as lawless. This campaign, however, has been frustrated at times by the vague legal status of cryptocurrencies, which has led to a series of court battles over whether the SEC even has jurisdiction over the industry.This critical question of jurisdiction turns on whether a given cryptocurrency is a security, an issue that has not definitively been addressed by courts. While there is a consensus Bitcoin is instead a commodity, under the supervision of the Commodities and Futures Trading Commission, Gensler has signaled his agency regards the vast majority of other cryptocurrencies as securities that must be registered with the SEC.The SEC has made this case in recent court cases, except when it comes to Ethereum, whose legal status is even murkier. The security status of Ether has long been a point of contention for the agency. Speaking at a conference in 2018, then-Director of Corporation Finance William Hinman [said](https://archive.is/o/ZNt54/https://www.sec.gov/news/speech/speech-hinman-061418) that Ether did not resemble a security. Emails [published](https://archive.is/o/ZNt54/https://www.coindesk.com/policy/2023/06/13/hinman-emails-reveal-2018-speech-on-ether-drew-input-from-multiple-sec-officials/) as part of the Ripple trial revealed that SEC staff deliberated on how clear to make the assertion and that one official wanted to say that the agency did “not…see a need to regulate Ether.”That changed under Gensler, who took over the agency in 2021, and following Ethereum’s switch to proof-of-stake the following [year.At](http://year.At) that time, Gensler [said](https://archive.is/o/ZNt54/https://www.wsj.com/articles/ethers-new-staking-model-could-draw-sec-attention-11663266224) that any crypto assets produced by blockchains that use a proof-of-stake model could resemble investment contracts and therefore be classified as securities, although he was not speaking about any specific coin. In March 2023, he once again [suggested](https://archive.is/o/ZNt54/https://www.bloomberg.com/news/articles/2023-03-15/sec-s-gary-gensler-signals-tokens-like-ether-are-securities) that proof-of-stake tokens could be regulated as securities, although he’s since [declined](https://archive.is/o/ZNt54/https://fortune.com/crypto/2023/04/18/mchenry-gensler-sec-ether-cryptocurrency-security-commodity/) to comment specifically on Ethereum, including at SEC oversight hearings at the House Financial Services Committee.The issue grew more complicated in October after the SEC [approved](https://archive.is/o/ZNt54/https://www.etf.com/sections/news/sec-approves-9-ether-futures-etfs) nine ETFs that tracked the Ether futures market, which is overseen by the CFTC, suggesting the view Ether is a commodity. CFTC Chair Rostin Behnam has said on [several occasions](https://archive.is/o/ZNt54/https://fortune.com/crypto/2023/03/08/stablecoins-ether-commodities-cftc-rostin-behnam-sec-gary-gensler/) that his agency views Ether as a commodity.But last month, the controversial crypto firm Prometheum, which has the approval to operate as a special purpose broker-dealer, [announced](https://archive.is/o/ZNt54/https://fortune.com/crypto/2024/02/07/sec-prometheum-ethereum-broker-dealer-gary-gensler-coinbase/) its intention to offer custody services for Ethereum as a security under SEC oversight, once again adding uncertainty to Ether’s regulatory status. One of the recipients of the recent subpoena speculated that Gensler has sought to use Prometheum as a Trojan Horse to classify Ethereum as a security.The recent race by major financial firms including Fidelity and BlackRock to gain approval for a spot Ether ETF has brought the issue into the spotlight, with all signs [pointing](https://archive.is/o/ZNt54/https://www.coindesk.com/markets/2024/03/19/ether-etfs-likely-wont-get-approved-in-may-bloomberg-analyst-predicts/) to the SEC rejecting the applications by their May deadline. Bloomberg analysts have pointed out that agency staff have not gone back and forth with issuers on details about the potential, as they did with the spot Bitcoin ETFs, which were [approved](https://archive.is/o/ZNt54/https://fortune.com/crypto/2024/01/10/sec-bitcoin-etfs-gary-gensler-blackrock-fidelity-hacking/) in January.A potential declaration that Ether is a security could throw the process into further doubt, especially as it would raise questions over the CFTC’s supervision of Ether futures markets.
Layer 2s will also presumably be in the firing line.
This could get really bad for the market.
P.S. only BTC and XRP are officially, legally not securities in the USA.
If XRP isn't a security then ETH is clearly not a security. As with every other important decision, the SEC will deny and wait for the courts to force their hand.
"See, it's not my fault" --Gary
The Supreme Court this June will strip the SEC of much of it's ability to have its own judges and impose it's own fines. They will also strip the ability of federal agencies to have Chevron deference.
If they get rid of Chevron deference, the SEC can't interpret congressional law how THEY want. It has to go in front of a federal judge.
And then that federal judge will decide whether eth is a security.
Mark my words.
> And then a federal judge will decide whether eth is a security.
That’s terrifying. Judges of *general* jurisdiction should not be judging cases in these highly tech-specific areas where misunderstandings of technology, law and policy all collide. That’s one of the reasons administrative agencies were created, to deal with subjects in highly specialized fields with parallel court systems equipped with specialized knowledge of the fields they regulate.
Whether letting federal judges classify various coins as currency/security would temporarily benefit crypto is kind of beside the point, this would be a very, very bad long term idea for crypto and for many other reasons.
I very much agree with you. The courts will not have the background to deal with these situations. And it will be awful for federal agencies everywhere. But it is going to happen.
Eliminating chevron deference will be an unmitigated disaster for the United States and by extension the world. Crypto may benefit from this but the whole world will suffer. It’s a profoundly short-sighted solution.
Oh I agree totally. It's going to be a disaster especially for the environment. But it's absolutely going to happen. I would bet my house on it.
I disagree with the way the game is played, but I'm not going to lose the game because of how I think it should be played.
They can buy it off exchanges or OTC just fine. They can't buy it directly from Ripple (probably at discount too). They will have to pay the market price, so that's good.
No, XRP isn’t in that category. It is still getting decided in courts. There was a mixed outcome of the XRP case but there are currently other cases which could change that outcome. Very likely XRP will end up classified as security
It isn't a security, and that has legal clarity. The only thing still being debated is whether the direct sales of XRP by Ripple to customers constituted security contracts.
The open market sales (i.e. exchanges) are non-securities. Ripple paid $200m and three years in court to get to that point.
It sure can. Until SEC comes out in open and say XRP isn’t a security, there is always a chance. The outcome of that case said, some types of XRP was security, others types weren’t, depending on how Ripple sold XRP. SEC is still pursuing other cases to determine that XRP is a security.
Out of all the big crypto issued, XRP is a lead contender to be a security because of pre mined amounts and amounts given to ripple executives and VCs.
No the judge very clearly ruled that XRP is not a security. Yes she did rule that institutional XRP sales made by Ripple were sales of securities.
The judge’s rule is law. XRP itself being not a security is now law. That will not change unless the SEC appeal and win. Or if new regulations come that over rule it. Another case cannot over rule it unless it is at a higher court. There are no such cases.
I’m sorry but the judge listened to very sophisticated arguments on whether XRP is or is not a security. She ruled that it is not. Unless you are secretly a leading securities expert, and read all the court docs, you cannot claim that your judgement is more insightful or more correct than hers.
>Out of all the big crypto issued, ~~XRP~~ **ETH** is a lead contender to be a security because of pre mined amounts and amounts given to Ethereum foundation founders and VCs.
FTFY
Imagine if the dems lose the elections and then Gary sues Ethereum during his last day of work. It would be poetic. I wonder where I got the idea from...
ETH is a security.
Premined, pre-sale, minting additional ERC tokens from other altcoins and issuing it to ETH holders. It’s basically a pyramid scheme tbch.
ETH is a commodity that acts as gas for the EVM. ETH represents some amount of computation on a global decentralized computer. In other words, it represents work that can be done just like oil and gas do.
lol if it’s origins are pre-mined and there’s a pre-sale, it’s a security. It doesn’t matter if it’s mined now. Even if it switched to proof of stake, its scam is well documented. Vitalik built ETH by himself because Bitcoin wouldn’t let him change the decentralized code.
Also, you’re only as rich as the next person who has more ETH than you. The proof of stake makes it even worse, because all the whales that bought in early are pretty much reaping all the rewards while you have the scraps.
It doesn’t matter if it was premined in 2014. A security represents ownership in an entity. ETH does not. Instead, ETH represents work that can be done on the EVM. Let me ask you this: if I mine some gold and make sure my investors get first dibs, does that automatically make gold a security?
That’s the point. It went to the founders of the project when it was PoW. The developers and investors.
They spoke with directors at the SEC talked about how to not make it look like a security anymore. Changed to PoS with those same founders and some additional whales gained from strong arming vitalek. Those tokens are now in the beacon chain and other various wallets. Some are labeled, most arent, but it’s a shit ton of eth in all of them.
Ethereum [pros](/r/CryptoCurrency/comments/1bjnjy1/sec_probing_crypto_companies_in_ethereum/kvu4rm4/) & [cons](/r/CryptoCurrency/comments/1bjnjy1/sec_probing_crypto_companies_in_ethereum/kvu4sa5/) with related info are in the collapsed comments below.
SEC wants to battle Blackrock money ? This will be interesting
Blackrock told SEC it needs lower entry point for ETH.
the BTC:ETH ratio is pretty low after the BTC ETF but yeah that would make sense. All’s fair in government and finance…
Relax dude. Blackrock doesn't care that much.
Confused ... isn't Blackrock in control of the price , if they really want? They can't actually ... bu hu. MCap of Blackrock is 120bn ... Eth Mcap is way above that. (/s)
Market cap is not the same thing as assets under management. BlackRock has about $10 trillion in assets under management.
Yes ... that's the point why they Can move the price. But the investors also need to be on board with the investment.
Plus Gary has already said on video that ETH is not a security: [https://www.cryptotimes.io/2023/06/13/gensler-saying-eth-btc-is-not-security-video/](https://www.cryptotimes.io/2023/06/13/gensler-saying-eth-btc-is-not-security-video/)
That statement was made five years before eth was changed to proof-of-stake and started providing dividends...
>proof-of-stake and started providing dividends blah blah blah bitcoin pays mining rewards. There is no significant difference in the Howey analysis.
> bitcoin pays mining rewards. Energy must be expended to acquire mining rewards. Not so with eth dividends, which go to eth stakeholders for simply investing. So yes, bitcoin mining company shares are securities, because they provide a dividend. Just like eth dividends.
> for simply investing. Absolutely false. They are still doing the work of verifying the transactions, there just isn't an arbitrary difficulty added to it.
> > eth dividends, which go to eth stakeholders for simply investing. > Absolutely false. People who get those dividends disagree. They know exactly what staking is. > They are still doing the work of verifying the transactions And getting paid for it based upon how much they've invested. The rewards are even shared within a common enterprise.
> And getting paid for it based upon how much they've invested Again, absolutely false for ETH validators.
Eth investors receiving dividends disagree. You know what matters to the SEC? What investors think and why they think that way.
Ethereum provides "dividend" only if you are a validator.
> Ethereum provides "dividend" only if you are a validator. True, but irrelevant. The issue is that there is an investment return as a result of the efforts of others. That's what makes it a security. Before the switch to proof-of-stake, it could be argued that mining is separate from ownership. That is no longer the case. Now dividends have a requirement of ownership of the security. I don't know why all of this is a surprise really. This was all discussed for years before the decision to go to proof-of-stake.
> True, but irrelevant. The issue is that there is an investment return as a result of the efforts of others. You don't get returns on ETH without running a validator, so your argument makes no sense. If you were talking about liquid staking derivatives (like Lido's stETH) where you earn rewards but don't actually propose and attest to blocks then maybe that would be reasonable, but that just isn't how it works for ETH, you actually have to do the work to earn the rewards.
> You don't get returns on ETH without running a validator, But you do get returns if you do run a validator, which makes it a security. It is literally the definition of one; Investment returns. The more you invest, the bigger the returns. I really don't know why people are finding this surprising. It's not like this is something that people are recently learning.
Running a validator is not the efforts of others though, obviously.
Where is the dividend coming from? Them.
What dividend? Validators get rewards from two sources: fees from the execution layer (e.g. users paying for the block builder to include their transactions); and the consensus layer (e.g. attestation rewards for checking and voting on the validity of proposed blocks). That's not a dividend, no one is doing the work for you... if you miss your attestations you don't earn the pay for making them, if you don't include a transaction in the block you build then you don't get the tips from their gas fee. Do you think Bitcoin miners are earning 'dividend' just because they are running code that they didn't write themselves? Are block rewards a 'dividend' in your opinion?
"Note that in the future, it is likely that Ethereum will switch to a proof-of-stake model for security, reducing the issuance requirement to somewhere between zero and 0.05X per year." It's been in the white paper since its inception.
The issue is who is collecting the dividend. In proof-of-work, money is invested in mining that returns a dividend in rewards, so if you're investing in proof-of-work mining, you're investing in a security. Just like proof-of-stake dividends.
Its not about proof of stake, Hedera is and the never named it a security. The Sec names some 50+ networks/ projects that it deemed were. In ETHs case it likely more to do with the contracts they had during the changeover to PoS. That it is a security but was it traded as one for a while along with its initial funding.
> Its not about proof of stake It clearly is to the SEC. > According to a person at a company who received a recent subpoena request, the SEC’s probe of the Swiss-based Ethereum Foundation began shortly after the blockchain’s shift to a new governance model known as “proof-of-stake” in September 2022.
Clearly it not because the SEC already listed 50 odd cryptos they deemed securities and Hedera which is PoS was not one of them. You can be sure they know all about Hedera and it wasnt an oversight either, because they registered their pre sales with them. Its far more likely the SEC is taking issue with how they locked up tokens under contract during the change over.
Which didnt stop the SEC from going after Ripple. (hes on video saying its a currency)
Because turncoat
I mean when he was question during the congressional hearing as chairman of the SEC he refused to answer "is Eth a security"
He's a turncoat, one of the worst in history. Turned on the entire space.
yet he refused to answer if it is or isnt in a hearing and he was grilled over and over about it.
Amazing
hehe , just one call 🤭🤭🤭
Tokenization can and will happen on the Bitcoin network with less security hacks unlike with Ethereum. Ethereum is a security. The pre-mine and staking prove it. https://x.com/excellion/status/1422789730601627651?s=46
bitcoin maxis are so ridiculous 🤣
And retail is DUMB money for a reason.
Okay Gary. Gtfoh
BlackRock is ready for Litecoin, Doge and BitcoinCash ETFs :) Proof of Work
I love it when clueless kids think blackrock is some kind of a financial illuminati, when in reality they worth less than Apple's weekly net income.
They've battled Musk.
“the token…all by itself is not a security, just as the orange groves in Howey were not.” - SEC Director of Corporate Finance, Bill Hinman, speaking on Ethereum
XRP has entered the chat
It's almost like there was a double standard for years hmmm
Did you say Hinman emails? 🤔
And send their regards...
You mean LBRY right? lol.
OG crypto, my man lol
Yeah that means fuck all when Hinman has a vested interest in saying so.
[удалено]
Proof of stake consensus=security
[удалено]
From the website you linked: > This site should be deemed as research and opinion. It does not reflect legal advice or guidance
You guys click links?????
We’ve created a token foundry. We’ve made tens of billions selling tokens” Joseph Lubin.
Bill Hinman is being investigated for his conflicts of interests regarding that speech (and in general): [https://empowr.us/confirmed-sec-inspector-general-in-final-stages-of-investigation-on-crypto-conflicts-referred-by-empower-oversight/](https://empowr.us/confirmed-sec-inspector-general-in-final-stages-of-investigation-on-crypto-conflicts-referred-by-empower-oversight/)
I hope that goes the way of justice
[удалено]
Lol
Yes, but Hinman had a bit of a conflict of interest so I'm not sure the SEC would feel compelled by that in its current incarnation, especially since it's quietly deleted all mention of him from its site. https://protos.com/former-sec-director-hinman-made-millions-from-a-pro-ethereum-firm-during-tenure/
gensler is gonna go through the motions and be surprised at everything he “uncovers”. So he isn’t an accessory
Hinman was warned about meeting with ETH foundation pundits by the internal SEC audit and compliance team noting he was accepting millions of dollars in retainer/pension from his ex-law firm (Simpson Thatcher & Bartlett) who were pro-ETH. There are internal emails from the SEC team in the public sphere telling him explicitly that it was a conflict of interest, and he wasn't to get involved. He then magically and serendipitously gave the 'Hinman speech' where he declared ETH wasn't a security, which has since been renounced by SEC as not being true and 'only his personal opinion.' Hinman is a crook, and it is one of the most flagrant and blatant acts of corruption seen.
[And yet Gensler and the IG will probably find nothing in their internal investigation](https://www.crypto-law.us/confirmed-sec-inspector-general-in-final-stages-of-investigation-on-crypto-conflicts-referred-by-empower-oversight/). No wrongdoing whatsoever. Crooks always cover each others asses.
You're missing the quote from him where he says "disregarding past sales".... kind of important that, as they were securities sales. Not only that, after that speech, ETH then became a token printing machine...
“Putting aside the fundraising that accompanied the ether ico…..”
ETH had a) a company behind it b) premine (google eth premine) c) it’s now proof of stake
Yes yes of course they are going to deny the first pass, there will be a lot of back and forth, BlackRock will spend a ton of money on lawyers and eventually they are going to win. ETH ETF next year maybe
SEC, dont delay what its inevitable, ETH ETF will come sooner than later as same happens with BTC
I don’t know much about Eth history but wasn’t there a presale and premined eth on its creation?
Yes, yes there was.
This is the sole reason, its complicated. Maybe the fact that they forked and changed to a staking currency matters but id imagine in the grand scheme of things they will say its a security.
I think the SEC might have said "too late to fix" if they had stayed as a proof-of-work asset. But when they switched to proof-of-stake, they essentially forced their hand.
I've been holding ETH since late 2016 and am thinking of selling for Bitcoin. I just cannot see how ETH isn't a security. The Ethereum Foundation is essentially a company with a salaried dev team and product roadmap for Ethereum. There was a pre-mine for the founders and they intervened during the DAO hack to return ETH. I think the move to PoS was a HUGE mistake as well since it now provide native yield. It seems more centralized and risky to me now than it ever has.
It is. But ESG nonsense might allow it to pass, as they want centrally controlled crypto to pump.
Also approving the ETH ETF will open up the floodgate of ETFs for hundreds of other centralized coins. My plan was to see if I can get one more pump out of ETH this run and sell around $10k, but the idea of just selling it and holding untouchable Bitcoin is more appealing every day.
And it seems like this conversation gets downvoted everytime it’s brought up. In my mind, SEC wants to use ETH to balance the scales. To show that crypto doesn’t only go up. Like they want to bring down one player to show their power while in reality, there’s a reason why: the presale I almost sold all my eth when I first heard this news. It’s about 10% of my portfolio.
Smart decision. There is no second best.
im terrified of the tax hit tbh but better to rip the band aid i suppose
I mean it is a decentralized currency that can be exchanged at will :)
Unless the Ethereum foundation decides it'd like to fork ETH and reverse it
Hahaha do it quickly then and get some real money. Eth has been underperforming this cycle, and I feel that will continue.
If XRP is not a security then ETH isn't either
the judge who ruled XRP case is a moron. SEC is licking their wounds. Judge said some XRP tokens are securities and some other tokens are not.. LMAO. SEC has to find out whose tokens are securities. lol.
Don't blame the wise Judge Torres for your inabilty to distinguish something other than black and white. The ETH token by itself is not a security just as the XRP token isn't. The Ethereum Foundation has certainly been involved in a a bunch of security violations for sure, though.
> The ETH token by itself is not a security just as the XRP token isn't. ya yeah like the apples etc etc. but can you premine apples ?
There is no second best. Bitcoin forever.
[удалено]
Lol that one was better than expected
they just dont want eth etf!
SEC claims XRP is a security: almost all USA exchanges delist, entire sub mocks Ripple for years and gets proven wrong in the end. SEC claims ETH is a security: No exchange delisting's so far, entire sub using Ripples defense to form their legal opinion... Kinda seems like Ripple told ya so, Maybe instead of all the dumb infighting between morons we should be supporting crypto as a whole... I dunno, crazy ideas I guess.
> SEC claims ETH is a security source? Because that certainly isn't said in the OP article.
What does the first letter of SEC stand for? also https://www.coindesk.com/markets/2024/03/20/ether-tumbles-6-as-eth-etf-hopes-dim-amid-regulatory-probe-reports/#:~: "Fortune said the SEC is examining whether ETH is a security."
What's the second letter? There are ETF applications. They are doing due diligence. Thanks for confirming there is no source of the SEC claiming ETH is a security.
uhh what? did you not read my reply? hello is this thing on?
Oh, so because you ninja edited your response, now you're going to use that as an insult when I reply to the initial one line comment. >SEC is examining whether ETH is a security. **Thanks for confirming there is no source of the SEC claiming ETH is a security.**
>Oh, so because you ninja edited your response, now you're going to use that as an insult when I reply to the initial one line comment. did you fall on your head or? try reading when someone replys. >Thanks for confirming there is no source of the SEC claiming ETH is a security. Yeah Im sure the SEC just Subpoenas several companies to turn over documents and Financial records related to Eth foundation because its NOT interested in the Security status of ETH. it does it for "funzies". Cope
> did you fall on your head or? try reading when someone replys. All you're doing is proving what a scumbag you are. You initially replied with only the one line about the first letter of the SEC. You quickly edited it with more stuff, but I had already seen and was replying to what you wrote. The fact that you're lying about it now really shows you have no character.
> All you're doing is proving what a scumbag you are. you asked question, I provided answer. ur now calling me a scumbag for some reason. Again are you delusional or did you fall on your head as a child? > You initially replied with only the one line about the first letter of the SEC. You quickly edited it with more stuff, but I had already seen and was replying to what you wrote. I did no such thing. >The fact that you're lying about it now really shows you have no character. the fact that you're randomly attacking me after providing the answer to your question directly shows you are a moron who clearly didnt read what was said to them. enjoy being wrong IDC
>I did no such thing. You absolutely 100% did. > after providing the answer to your question You haven't even done that. SEC issuing subpoenas ahead of an ETF != SEC claiming ETH is a security.
Damn bro those bags sound heavy
You mean the XRP bags of the guy who is editorializing what happened today, and is lying about not editing his comment?
No your Eth bags
Oh, so you're stupid. Poor thing.
Actually u/noncognitive is right. This investigation has to do with the DAO hack years ago not its status as a security. There are ties of the ETH foundation to the hack and theft.
> There are ties of the ETH foundation to the hack and theft lol where do you people come up with this shit? Try pulling your head out of your ass and not believing every piece of bologna you come across.
You're twisting things a bit. It's more like: SEC sues Ripple Labs for securities violations while claiming that XRP itself is a security: almost all exchanges delist XRP. SEC sues Ethereum Foundation for securities violations while claiming ETH itself is a security... hasn't happened yet, and you better hope it doesn't if you hold ETH.
> hasn't happened yet, It has we the public just dont know about it yet. Again you dont put the Canary in your code base to Not make note of when it died and how it died. That Canary is the only reason we know about the SEC's subpoenas, as the parties involved are currently sworn to secrecy.
Dude ethereum is a joke with “gas” fees please don’t ETF this
Post is brigaded
tldr; The regulatory status of Ether has long been a point of contention for the Securities and Exchange Commission. The regulatory status of Ether has long been a point of contention for the Securities and Exchange Commission. *This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.
A bit of a swing and a miss with this tldr... damn those pay walls
Part 1 The Securities and Exchange Commission is waging an energetic legal campaign to classify Ethereum, the second-most popular cryptocurrency, as a security, according to U.S. companies that have received subpoenas related to an investigation. The news delivers a further blow to the crypto industry’s hopes the agency will approve applications by [BlackRock](https://archive.is/o/ZNt54/https://fortune.com/company/blackrock/) and others for an Ethereum ETF following the SEC’s approval of a [series of Bitcoin ETFs](https://archive.is/o/ZNt54/https://fortune.com/crypto/2024/03/01/bitcoin-etfs-crypto-blackrock-fidelity-prices-high/) in January.The SEC’s Ethereum investigation involves demanding companies furnish any documents and financial records they may have regarding their dealings with the Ethereum Foundation, a nonprofit group that oversees the governance and development of the blockchain by the same name.According to a person at a company who received a recent subpoena request, the SEC’s probe of the Swiss-based Ethereum Foundation began shortly after the blockchain’s shift to a new governance model known as “[proof-of-stake](https://archive.is/o/ZNt54/https://fortune.com/crypto/2022/08/19/everything-to-know-about-the-ethereum-merge/)” in September 2022. Another person at a separate company that received a subpoena described it as narrow and focused on the Ethereum Foundation, and said they received the subpoena in the last few weeks.That proof-of-stake event moved the blockchain away from the energy-intensive model used by Bitcoin in favor of one that relies on a trusted network of validators—and provided the SEC with a new pretext to attempt to define Ethereum as a security, according to people at three different companies familiar with the subpoenas. The people asked *Fortune* not to identify identify them or their firms for fear of retaliation by the agency’s chair, Gary Gensler, whom one described as “vindictive.”The existence of an investigation into the Ethereum Foundation was reported on Wednesday by [*CoinDesk*](https://archive.is/o/ZNt54/https://www.coindesk.com/business/2024/03/20/ethereum-foundation-under-investigation-by-state-authority/), which cited an update to the group’s Github code repository that reportedly provided evidence of a probe by an unknown state agency.“The SEC does not comment on the existence or nonexistence of a possible investigation,” the agency said in response to a request for comment from *Fortune*.
Part 2 # A push to label Ethereum a security The news of the subpoenas comes as the SEC and the Biden administration pursue an aggressive campaign to cut down the crypto industry, which they characterize as lawless. This campaign, however, has been frustrated at times by the vague legal status of cryptocurrencies, which has led to a series of court battles over whether the SEC even has jurisdiction over the industry.This critical question of jurisdiction turns on whether a given cryptocurrency is a security, an issue that has not definitively been addressed by courts. While there is a consensus Bitcoin is instead a commodity, under the supervision of the Commodities and Futures Trading Commission, Gensler has signaled his agency regards the vast majority of other cryptocurrencies as securities that must be registered with the SEC.The SEC has made this case in recent court cases, except when it comes to Ethereum, whose legal status is even murkier. The security status of Ether has long been a point of contention for the agency. Speaking at a conference in 2018, then-Director of Corporation Finance William Hinman [said](https://archive.is/o/ZNt54/https://www.sec.gov/news/speech/speech-hinman-061418) that Ether did not resemble a security. Emails [published](https://archive.is/o/ZNt54/https://www.coindesk.com/policy/2023/06/13/hinman-emails-reveal-2018-speech-on-ether-drew-input-from-multiple-sec-officials/) as part of the Ripple trial revealed that SEC staff deliberated on how clear to make the assertion and that one official wanted to say that the agency did “not…see a need to regulate Ether.”That changed under Gensler, who took over the agency in 2021, and following Ethereum’s switch to proof-of-stake the following [year.At](http://year.At) that time, Gensler [said](https://archive.is/o/ZNt54/https://www.wsj.com/articles/ethers-new-staking-model-could-draw-sec-attention-11663266224) that any crypto assets produced by blockchains that use a proof-of-stake model could resemble investment contracts and therefore be classified as securities, although he was not speaking about any specific coin. In March 2023, he once again [suggested](https://archive.is/o/ZNt54/https://www.bloomberg.com/news/articles/2023-03-15/sec-s-gary-gensler-signals-tokens-like-ether-are-securities) that proof-of-stake tokens could be regulated as securities, although he’s since [declined](https://archive.is/o/ZNt54/https://fortune.com/crypto/2023/04/18/mchenry-gensler-sec-ether-cryptocurrency-security-commodity/) to comment specifically on Ethereum, including at SEC oversight hearings at the House Financial Services Committee.The issue grew more complicated in October after the SEC [approved](https://archive.is/o/ZNt54/https://www.etf.com/sections/news/sec-approves-9-ether-futures-etfs) nine ETFs that tracked the Ether futures market, which is overseen by the CFTC, suggesting the view Ether is a commodity. CFTC Chair Rostin Behnam has said on [several occasions](https://archive.is/o/ZNt54/https://fortune.com/crypto/2023/03/08/stablecoins-ether-commodities-cftc-rostin-behnam-sec-gary-gensler/) that his agency views Ether as a commodity.But last month, the controversial crypto firm Prometheum, which has the approval to operate as a special purpose broker-dealer, [announced](https://archive.is/o/ZNt54/https://fortune.com/crypto/2024/02/07/sec-prometheum-ethereum-broker-dealer-gary-gensler-coinbase/) its intention to offer custody services for Ethereum as a security under SEC oversight, once again adding uncertainty to Ether’s regulatory status. One of the recipients of the recent subpoena speculated that Gensler has sought to use Prometheum as a Trojan Horse to classify Ethereum as a security.The recent race by major financial firms including Fidelity and BlackRock to gain approval for a spot Ether ETF has brought the issue into the spotlight, with all signs [pointing](https://archive.is/o/ZNt54/https://www.coindesk.com/markets/2024/03/19/ether-etfs-likely-wont-get-approved-in-may-bloomberg-analyst-predicts/) to the SEC rejecting the applications by their May deadline. Bloomberg analysts have pointed out that agency staff have not gone back and forth with issuers on details about the potential, as they did with the spot Bitcoin ETFs, which were [approved](https://archive.is/o/ZNt54/https://fortune.com/crypto/2024/01/10/sec-bitcoin-etfs-gary-gensler-blackrock-fidelity-hacking/) in January.A potential declaration that Ether is a security could throw the process into further doubt, especially as it would raise questions over the CFTC’s supervision of Ether futures markets.
Not all heroes wear capes
Layer 2s will also presumably be in the firing line. This could get really bad for the market. P.S. only BTC and XRP are officially, legally not securities in the USA.
If XRP isn't a security then ETH is clearly not a security. As with every other important decision, the SEC will deny and wait for the courts to force their hand. "See, it's not my fault" --Gary
The Supreme Court this June will strip the SEC of much of it's ability to have its own judges and impose it's own fines. They will also strip the ability of federal agencies to have Chevron deference. If they get rid of Chevron deference, the SEC can't interpret congressional law how THEY want. It has to go in front of a federal judge. And then that federal judge will decide whether eth is a security. Mark my words.
> And then a federal judge will decide whether eth is a security. That’s terrifying. Judges of *general* jurisdiction should not be judging cases in these highly tech-specific areas where misunderstandings of technology, law and policy all collide. That’s one of the reasons administrative agencies were created, to deal with subjects in highly specialized fields with parallel court systems equipped with specialized knowledge of the fields they regulate. Whether letting federal judges classify various coins as currency/security would temporarily benefit crypto is kind of beside the point, this would be a very, very bad long term idea for crypto and for many other reasons.
I very much agree with you. The courts will not have the background to deal with these situations. And it will be awful for federal agencies everywhere. But it is going to happen.
lol
Eliminating chevron deference will be an unmitigated disaster for the United States and by extension the world. Crypto may benefit from this but the whole world will suffer. It’s a profoundly short-sighted solution.
Oh I agree totally. It's going to be a disaster especially for the environment. But it's absolutely going to happen. I would bet my house on it. I disagree with the way the game is played, but I'm not going to lose the game because of how I think it should be played.
XRP is still a security for institutional buyers.
They can buy it off exchanges or OTC just fine. They can't buy it directly from Ripple (probably at discount too). They will have to pay the market price, so that's good.
No, XRP isn’t in that category. It is still getting decided in courts. There was a mixed outcome of the XRP case but there are currently other cases which could change that outcome. Very likely XRP will end up classified as security
lmao
It isn't a security, and that has legal clarity. The only thing still being debated is whether the direct sales of XRP by Ripple to customers constituted security contracts. The open market sales (i.e. exchanges) are non-securities. Ripple paid $200m and three years in court to get to that point.
Sorry but that is not correct. No other court case can change the outcome.
It sure can. Until SEC comes out in open and say XRP isn’t a security, there is always a chance. The outcome of that case said, some types of XRP was security, others types weren’t, depending on how Ripple sold XRP. SEC is still pursuing other cases to determine that XRP is a security. Out of all the big crypto issued, XRP is a lead contender to be a security because of pre mined amounts and amounts given to ripple executives and VCs.
No the judge very clearly ruled that XRP is not a security. Yes she did rule that institutional XRP sales made by Ripple were sales of securities. The judge’s rule is law. XRP itself being not a security is now law. That will not change unless the SEC appeal and win. Or if new regulations come that over rule it. Another case cannot over rule it unless it is at a higher court. There are no such cases. I’m sorry but the judge listened to very sophisticated arguments on whether XRP is or is not a security. She ruled that it is not. Unless you are secretly a leading securities expert, and read all the court docs, you cannot claim that your judgement is more insightful or more correct than hers.
>Out of all the big crypto issued, ~~XRP~~ **ETH** is a lead contender to be a security because of pre mined amounts and amounts given to Ethereum foundation founders and VCs. FTFY
XRP will have an ETF before ETH
Honestly not sure if an ethereum etf would be good timing wise right now for the chain, someone if they know why or why not, shed some light on this?
Yes but call of duty zombies is based on the material aetherium (pronounced ethereum)… super bullish tbh
It’s the fabled bell end pattern which can only mean one thing. 🚀
Imagine if the dems lose the elections and then Gary sues Ethereum during his last day of work. It would be poetic. I wonder where I got the idea from...
Dear government asshats... Go away. You are corrupt and treasonous.
lol what an obvious little last ditch accumulation fud operation. Just gonna hold my super and wait for VALHALA
ETH is a security. Premined, pre-sale, minting additional ERC tokens from other altcoins and issuing it to ETH holders. It’s basically a pyramid scheme tbch.
ETH is a commodity that acts as gas for the EVM. ETH represents some amount of computation on a global decentralized computer. In other words, it represents work that can be done just like oil and gas do.
Why do you ignore everything he said
Because he’s talking about a premine in 2014
It’s all going to be relevant in court 🤷🏽♂️
ETH isn’t even mined anymore. I don’t see how it’s relevant
lol if it’s origins are pre-mined and there’s a pre-sale, it’s a security. It doesn’t matter if it’s mined now. Even if it switched to proof of stake, its scam is well documented. Vitalik built ETH by himself because Bitcoin wouldn’t let him change the decentralized code. Also, you’re only as rich as the next person who has more ETH than you. The proof of stake makes it even worse, because all the whales that bought in early are pretty much reaping all the rewards while you have the scraps.
It doesn’t matter if it was premined in 2014. A security represents ownership in an entity. ETH does not. Instead, ETH represents work that can be done on the EVM. Let me ask you this: if I mine some gold and make sure my investors get first dibs, does that automatically make gold a security?
That’s the point. It went to the founders of the project when it was PoW. The developers and investors. They spoke with directors at the SEC talked about how to not make it look like a security anymore. Changed to PoS with those same founders and some additional whales gained from strong arming vitalek. Those tokens are now in the beacon chain and other various wallets. Some are labeled, most arent, but it’s a shit ton of eth in all of them.
Is Bitcoin a security? It was premined by Satoshi and first distributed to people who helped on the project.
You’re so dense, just keep ignoring everything. Should be fine…
Not answering my question and turning to personal insults? I’ll take the W in this argument
Gary just can’t walk away from a losing battle, can he? Crypto will continue to bury him and his legacy.
Eth will be deemed a security
Ethereum Maxis that run this sub will delete this post. Don't bother posting this...
Poor fellows. I feel bad for them.. what a terrible thing to happen to their coin :(
Yeah, it's only 10% up today...
Dont interrupt their cope bro..let the bitcoin maxis cry themselves to sleep 🤣
These are xrp maxis lol
They can slow it down but it will eventually get over the line
It's not a matter of *if* for ETH ETF, just a matter of *when*
They will be all battered and bruised once Richard Hearts done with them 😄