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Ethereum Founder Vitalik Buterin is under pressure from the United States Securities and Exchange Commission (SEC). Now, the CEO of ConsenSys, is firing back against the Commission’s moves – here’s what you need to know.
A top-down preview of Ethereum shows that it is broader and deeper than Bitcoin. The layer pioneered smart contracts, giving it an edge over the world’s most valuable network.
But, even with billions of dollars moved annually through Ethereum and developers finding a new frontier, the United States Securities and Exchange Commission (SEC) thinks ETH, the native currency, is not like Bitcoin, at least for now.
Bitcoin was deployed without an ICO or any pre-mine; no one received anything. There is no foundation, team members, advisors, or other resources. To earn BTC, you had to mine. Satoshi mined 1 million BTC, but these coins have been unmoved for over 15 years.
What’s Going on With Ethereum Founder, ConsenSys, and the SEC?
Looking at Ethereum, a large chunk, reportedly 70% of the initial supply of 72 million ETH, was distributed or pre-mined to, among others, the Ethereum Foundation, the team, and advisors, even before the platform launched.
(DUNE)
This decision presents a major problem for Ethereum roughly ten years after launching. Reports in April suggested that the United States SEC has been investigating the Ethereum Foundation and is considering classifying ETH as a security.
Some say Gary Gensler, the chair, has thought for the last year or so that ETH is an unregistered security. ConsenSys, an Ethereum-centric company founded by Joe Lubin, sued the agency over its classification of ETH.
Specifically, the company filed a complaint expressing concerns about the SEC’s actions on Ethereum, particularly the consequences they could have on the network of investors’ portfolios.
This concern comes when the regulator appears intent on cracking the whip against MetaMask, a non-custodial wallet millions worldwide use to connect to Ethereum and other Ethereum-compatible platforms like Polygon.
DISCOVER: The Best Method to Buy Ethereum With Ease in May 2024
The Bottom Line: A Win For ConsenSys Is A Win For Vitalik Buterin
ConsenSys accuses the SEC of overreaching and regulating by enforcement. In a recent interview, Joe Lubin also maintained that ETH, like Bitcoin, is a commodity, not a security.
Today, Consensys took an important step towards preserving access to ether and by extension the Ethereum blockchain in the U.S. We are suing the SEC and fighting back against its overzealous regulatory overreach. You can find more of my thoughts here: https://t.co/VmvOsrCxjw… https://t.co/5IubZo69FW
— Joseph Lubin (@ethereumJoseph) April 25, 2024
As crypto rules evolve in the United States, a win for ConsenSys may fast-track the development of even clearer laws, providing clarity for ETH. In an interview, Lubin said the regulator has emphasized a false narrative that the coin is a security.
Once there is clarity on Vitalik Buterin’s Ethereum, it will pave the way for the eventual approval of spot ETFs in the coming months. With BlackRock, Fidelity, and others among those interested in issuing the derivative product, this would open up new investment opportunities.
Lubin fears an SEC victory could stifle innovation and hinder crypto development, leading to power centralization. Their lawsuit, the co-founded added, is an attempt to prevent the regulator from expanding its jurisdiction to the future of the Internet.
Consensys hopes the lawsuit will force clarity and establish a “safe zone” for decentralized protocols to flourish. Even so, the case (learning from a similar battle versus Ripple) could drag on for years.
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
