Facebook Twitter Instagram
    NFT News, NFT Price Insights & Games
    • Home
    • Calendar
    • Market
    • NFT News
    Twitter
    NFT News, NFT Price Insights & Games
    News 4 Mins Read

    SEC Claims Jurisdiction over All ETH Transactions

    September 27, 2022Updated:October 15, 2022
    Facebook Twitter Telegram LinkedIn Pinterest Tumblr Reddit Email WhatsApp
    Eth Transactions
    Share
    Facebook Twitter LinkedIn Pinterest Email

    The United States Securities and Exchange Commission (SEC) claims it has jurisdiction over all ETH transactions since most ETH validators are concentrated in the United States.

    A September 19 lawsuit filed by the United States Securities and Exchange Commission (SEC) against cryptocurrency researcher and YouTuber Ian Balina includes the argument that the SEC has jurisdiction over all Ethereum or ETH transactions. The SEC’s unprecedented claim is that most ETH transactions occur in the U.S. since Ethereum nodes are “clustered more densely” in the U.S. than anywhere else.

    Nft News &Amp;Ndash; Sec Claims Jurisdiction Over All Eth Transactions 1
    The SEC’s 23-Page Lawsuit Against Ian Balina

    The lawsuit against Balina alleges that he conducted an unregistered offering of Sparkster (SPRK) tokens after forming a Telegram-based investing pool in 2018. So, how was the SEC able to include the jurisdiction claim regarding ETH transactions? 

    The SEC claims that when U.S.-based investors participated in Balina’s investing pool, a network of nodes on the Ethereum blockchain, “which are clustered more densely in the United States than in any other country,” validated the ETH contributions. They argued that, as a result, “those transactions took place in the United States.”

    A Screenshot Of A Computer

Description Automatically Generated With Medium Confidence
    The SEC’s Logic on its Jurisdiction Claims over ETH Transactions

    The SEC’s Beef with ETH Transactions

    The SEC’s beef with ETH transactions stems from SEC Chief Gary Gensler’s offensive attack against cryptocurrencies in general. It appears that Gensler looks at Ethereum as security—a financial instrument with monetary value that can be traded. Thus, he considers it under the jurisdiction of the SEC.

    Gensler’s claim contradicts a 2018 announcement from the SEC during Yahoo Finance’s All Market Summit: Crypto. At the event, then director of the SEC’s Division of Corporation Finance William Hinman said the commission would not be treating Ether or Bitcoin as securities.

    At this stage, it is unclear whether the SEC’s claim would hold up in court or if there is any legal precedent for such a claim. Nevertheless, according to Ethernodes, 42.56% of the 7,807 Ethereum nodes are currently in the U.S.

    Aaron Lane, an Australian lawyer and senior research fellow at the RMIT Blockchain Innovation Hub, said in an interview that Ethereum nodes’ distribution is irrelevant to Balina’s case.

    “The fact that we’ve got a U.S.-based plaintiff, a U.S.-based defendant, and transactions flowing from the U.S. is what is most relevant here. It doesn’t matter whether the payment was done on Ethereum, Mastercard, or any payment network for that matter,” Lane explained.

    He did say the SEC’s claim was interesting, but he added that even if Balina’s lawyers do not contest the issue of jurisdiction, it will not impact future cases for now.

    “The defense may concede jurisdiction here, and if they do, it won’t be an issue, and if it’s not a contested issue, then the court won’t say anything about it. Any concern about legal precedent at this stage is premature.”

    Twitter Outrage on Claims Regarding ETH Transactions

    Gensler’s overall stance against crypto that dragged the issue regarding ETH transactions caused outrage on Twitter. Fueling the rage is the SEC’s history of regulatory approach toward cryptocurrency, which cryptocurrency enthusiasts have previously criticized and labeled “regulation by enforcement.”

    Adam Cochran, an information science and business professor, said the SEC would have had an easy win but shot itself in the foot after arguing that “all ETH transactions are ‘in the U.S.’ because of higher node density there.” Cochran also said it was “an absolutely unacceptable overstep that will have to be pushed back against aggressively.”

    Balina, the defendant in the case, is ready to face the SEC’s challenge head-on. Around midnight on September 20, he tweeted:

    Excited to take this fight public.

    This frivolous SEC charge sets a bad precedent for the entire crypto industry.

    If investing in a private sale with a discount is a crime, the entire crypto VC space is in trouble.

    Turned down settlement so they have to prove themselves. 💯 pic.twitter.com/lVaqnnsLgT

    — Ian Balina (@DiaryofaMadeMan) September 19, 2022

    And while he did not comment on the SEC’s jurisdiction claim regarding ETH transactions, he did create a 19-part Twitter thread where he responded to the SEC’s lawsuit by saying the charges were “baseless” and that he “turned down settlement, so they [SEC] have to prove themselves.”

    1/ Official Statement on the baseless SEC charges regarding Ian Balina being compensated for promoting Sparkster:

    The SEC Enforcement Division's proposed charges against Mr. Balina are an unfounded effort based upon multiple misconceptions of fact and law, enumerated below.

    — Ian Balina (@DiaryofaMadeMan) September 19, 2022

    Get more news updates 

    Get more NFT news updates at Omnimint News. For more information on Omnimint, and details on how to join our community, please follow our Twitter, or subscribe to our Telegram channel for more updates, and please feel free to submit your article.

    ethereum
    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email

    Related Posts

    Art Blocks NFTs—Thriving Amidst the Bear Market

    Featured November 10, 2022

    Disney’s Metaverse Development—Future of Storytelling

    Insights November 7, 2022

    Ethereum’s Shanghai Upgrade—What to Expect

    Insights November 4, 2022

    NFT-Related Incident Scams That Could Drain Your Wallet

    News November 3, 2022

    Halloween NFTs—Hauntingly Good or Overly Spooky?

    Featured October 31, 2022

    Latest Update on Crabada, And Some October Highlights

    Featured October 28, 2022
    Tags
    ApeCoin Art Azuki BAYC clone x CryptoPunks ethereum featured Game lifestyle magic eden marketplace meebits metaverse music NFT nft marketplace P2E ready player me scam solana spotlight superplastic tech the sandbox tutorials Web3
    Featured
    Featured

    Art Blocks NFTs—Thriving Amidst the Bear Market

    Featured Updated:November 11, 20226 Mins Read
    Featured

    Y00ts NFT Artwork Reveal Is Finally Here

    Featured Updated:November 10, 20225 Mins Read
    Featured

    Azuki x AMBUSH NFT Fashion Collaboration

    Featured Updated:November 9, 20224 Mins Read
    Trending