Neeraj Agrawal, Coin Center’s Director of Communications, disagreed with the New York Attorney General’s (NYAG) recent assessment of Ethereum as a security.
“Coin Center will be monitoring the case and if there is an opportunity to weigh in, we will.”
In support of this view, Agrawal linked to a 2018 article that argued that there is a difference between “a token pre-sale and the token itself.”
Applicable securities laws Use the Howey test to determine whether a contract, scheme, or transaction meets the definition of a security. It focuses on solving whether investors paid money into a joint venture with the expectation of profiting from the efforts of others.
Although these rules date back to the 1930s, before computers and digital assets, specific cryptocurrencies and initial coin offerings (ICOs) (or token pre-sales) met the definition of an investment contract, according to the regulators.
NYAG says Ethereum is a security
On March 9, NYAG, Letitia James, filed a lawsuit against Seychelles-based exchange KuCoin, citing concerns about “falsely presenting itself as an exchange.”
“Today’s action is the latest in our efforts to rein in shadow cryptocurrency companies and bring order to the industry.”
James said he could trade cryptocurrency on the exchange in New York, but the entity was not registered with the state. Furthermore, the AG added that users can buy and sell “popular virtual currencies, including ETH, LUNA, and TerraUSD (UST), which are securities and commodities.”
Although the main issue of the lawsuit centered on KuCoin operating illegally in New York, James categorically called trading in securities on the platform a basis for operating illegally, not just a lack of registration.
This paves the way for the status of Ethereum’s US securities to be determined in a court of law.
“This action is one of the first times a regulator has claimed in court that ETH, one of the largest cryptocurrencies available, is a security.”
The crypto community intervenes
Lawyer jake chervinsky He dismissed James’ claims about Ethereum, saying the enforcement action is simply an unsubstantiated accusation, albeit an accusation by a regulator.
“Agencies are like any other complainant: they can write whatever they want in a complaint. It may have some press, but it doesn’t change anything.“
Similarly, the founder of Messari ryan selkis echoed Chervinsky’s comments, saying: “ETH is not a security.” However, Selkis did not provide his reasoning, only hinting at a coordinated attack on cryptocurrencies, saying: “the the administrative state is completely out of control.”
Meanwhile, unsurprisingly, the Bitcoin maximalist Max Keiser He bucked the earlier consensus, praising regulators for “finally doing their job.”
“ETH is obviously a security. Now the regulators are finally doing their job. Shut down this shit show, Gary!“
