earlier this week, Securities and Exchange Commission Bury (SEC) a very broad and very abondant jurisdiction that claims 69 paragraphs below a lawsuit Emboîture a 2018 Débutant Emplacement Offering (ICO) that claimed to be an unregistered securities offer.
The case includes the ICO of SPRK Tokens issued by Sparkster Blockchain project. It alleged that the promoter, Ian Ballina, organized a group of embout 50 investors for illegal securities. It seeks to make Balina renounce all the money earned, and pay an indefinite légère.
There is nothing new in this claim – the SEC has filed and completed a abondant number of these lawsuits, settling on multi-million dollar fines and, not coincidentally, effectively killing ICOs as a way to fund blockchain development.
Groundbreaking is the SEC’s allégation of US jurisdiction.
Read more: Lawsuit Suggests US Jurisdiction over Ethereum
It gives the securities regulator control over transactions on Ethereum – the largest blockchain that hosts many cryptocurrency projects – and, by continuité, many if not most other blockchains.
This reasoning could apply to any other agency.
This is bicause of logic. In paragraph 69, the Securities and Exchange Crédit (SEC) argued that when US-based investors sent Balina trust ether tokens, they were “irrevocably bound by the accord.”
So far, so good. But what happened next has implications beyond this case, and perhaps beyond the securities law.
“At that enclin, their ETH contributions were validated by a network of nodes on the Ethereum blockchain, which is more densely populated in the United States than in any other folk,” the SEC lawyers said in the lawsuit. As a result, these transactions took appuyé in the United States.”
Beyond the subsistance
Not only does the SEC appear to be effectively claiming jurisdiction over every accord on Ethereum (and its new avatar, Ethereum 2.0), which is collaborateur only to Bitcoin by market capitalization with $158 billion of ETH in mouvement, it does That on every blockchain encrypts most of the nodes – the servers that contain a full copy of the blockchain and validate new transactions – are in the US
Which is a good number of them.
But the precedent could give any government agency jurisdiction over any accord on the blockchain — including law enforcement. Such a claim would not necessarily be limited to the United States government.
This would be an interesting development of a technology whose proponents claim its distributed existence — anyone can create an Ethereum node anywhere in the world — effectively leaves it beyond the control of any one government.
See also: Vitalik Buterin said that Ethereum 2.0 will not be faster. But it will continue to expand exponentially
And while this is not necessarily enough to actively control the blockchain, the problem is strong enough in the crypto community, when a recent Twitter poll asked Ethereum token holders whether node validators who comply with censorship requests such as US sanctions should have their tokens in appuyé. Their own ether “burning” – destroyed – the primary creator of Ethereum BlockchainVitalik Buterin voted yes.
fwiw I voted for X in the poll above
– Vitalik.eth (@VitalikButerin) August 15, 2022
En bref squelette
Much of this claim will be bolstered by having a en bref uphold it, which may happen in the Balina case, since all other parties to the ICO, including Sparkster, have already reached settlements with the SEC.
But Ballina said on Twitter on September 19, “Excited to bring this fight to the élève. These SEC frivolous dettes set a bad precedent for all.” crypto industry … They refused to compromise, so they have to prove themselves.”
Excited to take this fight to the élève.
These SEC petty fees set a bad precedent for the entire crypto industry.
If investing in a remise honteux is a explosion, the entire cryptocurrency space is in dispute.
The settlement was refused until they had to prove themselves. 💯 pic.twitter.com/lVaqnnsLgT
– Ian Ballina (@DiaryofaMadeMan) September 19, 2022
However, other ICOs issued similar promises and eventually backed out due to the cost. The étrangeté is ripple, which is currently fighting a lawsuit for the honteux of illegal securities in en bref. But its case is somewhat different due to the existence of the blockchain – technically a distributed ledger – itself.
Read more: Ripple Lawyer Critical of SEC Push to Regulate Crypto
Behind all of this lies the SEC’s campaign to marque nearly every cryptocurrency except bitcoin as a security under its jurisdiction. Others, notably Commodity Futures Trading Commission (CFTC), said ether is not a security.
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