Crypto Community Reacts to NYAG Lawsuit: Is Ethereum Really a Security?
Crypto Community Reacts to NYAG Lawsuit: Is Ethereum Really a Security?
Uncertainty over Ethereum’s security status, Ryan Selkis hints at a coordinated attack on crypto.
Cover art/illustration via Cryptooshala
Niraj Agarwal, Director of Communications at Coin Center, disagrees with the recent assessment of Ethereum as a security by the New York Attorney General (NYAG).
,CoinCenter will be monitoring this matter and if there is an opportunity to weigh in, we will.”
In support of this view, Agarwal links to a 2018 article arguing that there is a difference between “a token pre-sale and the token itself”.
Suitable securities law Use the Howey Test to determine whether a contract, plan, or transaction meets the definition of a security. It focuses on resolving whether investors paid money into a common venture with the expectation of profiting from the efforts of others.
Although the rules date back to the 1930s, before computers and digital assets, specific cryptocurrencies and initial coin offerings (ICOs) (or token pre-sales) meet the definition of an investment contract, according to regulators.
NYAG says Ethereum is a security
NYAG on March 9, Letitia James filed suit against him Seychelles-based exchange KuCoin, citing concerns over “misrepresenting itself as an exchange”.
“Today’s action is the latest in our efforts to crack down on shady crypto companies and bring order to the industry.”
James said it could trade cryptocurrencies on an exchange in New York, yet the entity was not registered in the state. In addition, AG said that users can “buy and sell popular virtual currencies, including ETH, LUNA, and TerraUSD (UST), which are securities and commodities.”
Although the main subject of the lawsuit focused on KuCoin operating illegally in New York, James explicitly called out securities trading on the platform as the basis for operating illegally, not just failure to register.
This paves the way for the US securities status of Ethereum to be determined in a court of law.
“This action is the first time a regulator is claiming in court that ETH, one of the largest cryptocurrencies available, is a security.”
Chime in the crypto community
Advocate Jake Chervinsky Dismissing James’ claims about Ethereum, the enforcement action is merely a baseless allegation, albeit a regulatory one.
“The agencies are like any other plaintiff: They can write whatever they want in the complaint. It can suppress something, but it doesn’t change anything.,
Similarly, Messari founder Ryan Selkis Echoing Chervinsky’s comments,ETH is not a security, However, Selkis did not provide his reasoning, pointing only to a coordinated attack against crypto, saying, “The The administrative situation is completely out of control.
Meanwhile, bitcoin extremists, as expected max keizer opposes previous consensus, praises regulators for “finally doing their job”.
“ETH is clearly a security. Now the regulators are finally doing their job. Stop the show, Gary!!!,
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