This history of Eth cannot be reversed. Same with Ripple. Eth when it was launched obviously had a promoter and founder who received immediate value for a sale of shares in the venture, with the shares being represented by eth tokens. Under a strict application of SEC rules, they really are screwed. As a result, it may very will likely lead to the SEC coming after Vitalk and others, and banning regulated exchanges from trading eth "tokens" (essentially an unregistered security).
You are spreading Ethereum FUD. Because that's all that BTC Maxis can do at this point.
The Ethereum ICO involved the exchange of BTC for ETH, not USD. Vitalik is not a US Citizen and lives in Singapore. So not sure what jurisdiction the SEC will have over him.
Bitcoin first became available to buy, sell and trade on online exchanges in 2010. In April 2011, the price of Bitcoin crossed the $1 threshold for the first time. So what is the difference between an ICO where BTC is exchanged for ETH tokens and being able to exchange USD for BTC in 2010? I fail to see how one would be deemed a security and the other not.
Satoshi was able to mine over 1 million BTC in the early days because he was the first to the gate. That is really no different than pre-mining.
We already have one SEC official claim Bitcoin and Ethereum are not securities. No SEC official has come out and stated Ethereum is a security. And the fact is Proof of Stake Ethereum does not satisfy all he criteria of the Howey Test.
The SEC's job is to protect investors. Where was Gary Gensler when SBF and FTX were defrauding investors? Oh yeah, he was meeting with him and probably having a great time. He failed at his job. The SEC has never been about protecting investors and entrepreneurs. They are really there to advance the agenda of established entities.
The SEC went after Preston Tucker and lost in 1950. But in the process, they destroyed his business and he had to shut down. There's a movie about it starring Jeff Bridges.
https://www.wired.com/2010/01/0122preston-tucker-acquitted/The SEC is a useless, corrupt entity like the FBI and CIA. All three should be dissolved. They are useless to us.
https://beincrypto.com/eth-pos-is-not-a-security-here-is-why/#:~:text=Ethereum's%20Merge%20has%20led%20to,be%20considered%20as%20a%20security.
How is the Howey test applied to prove an asset, a securityAccording to The Securities Act of 1933, an investment contract should have three prongs. A contract should satisfy all three prongs. If an instrument does not meet even any one of the prongs, it cannot be considered security.
1. An investment of money
2. In a common enterprise
3. With reasonable expectations of profits derived solely from the efforts of others
The prong one states, “An investment of money” The validators depositing their ETH in the smart contract to validate the transactions and keep the Ethereum blockchain secure is not necessarily “an investment of money.” They are putting ETH as collateral to participate in the PoS mechanism. They are not making a purchase or an investment.
However, this argument may be valid technically. Still, it cannot be considered a solid argument because the ETH deposited as collateral can be viewed as a “risk” and may fall under the investment criteria.
Does Ethereum satisfy the second prong?Under the second prong, “In a common enterprise,” there are two tests of Commonality:
1.Horizontal Commonality means the individual’s capitals are tied to each other by “pooling of funds.” It is combined by pro-rata distribution of profits. Some believe that staking ETH qualifies horizontal Commonality because the fund is staked in a “common” smart contract, which means “pooling of funds.” It is not pooling because no promoter or central authority has direct control over the staked ETH. The validators stake 32 ETH in a common smart contract, but the staked ETH remains distinct and bound to their node. Validators are incentivized to validate the transactions or slashed if they are involved in some malpractice. There is no impact on all the other validators based on the successful actions or failures of a single validator. Hence there is no pro-rata distribution of profits. Thus the Horizontal Commonality is irrelevant.
2. Vertical Commonality: The vertical Commonality focuses on the relationship between the investor and the issuer/promoter. It is irrelevant in the case of Ethereum because there is no promoter. Ethereum is a decentralized and open-sourced project. Anyone can join the Ethereum network as a validator. They are rewarded or slashed based on their actions through the codes of smart contracts. The rewards they receive are not due to the efforts of any promoters or issuer.
Hence Ethereum fails to satisfy both the test of Commonality. Failure of even one of the prongs proves that Ethereum cannot be considered a security as per the Howey test.
Does Ethereum satisfy the third prong?The third prong states, “With reasonable expectations of profits derived solely from the efforts of others.”
The staking reward in Ethereum is determined by the validator’s own efforts, as explained earlier. It does not “solely depend on efforts of others.” The validators are putting efforts into maximizing their up-time and remaining connected to the network.
Ethereum fails to satisfy, if not all, but 2 out of 3 prongs. Hence ETH PoS is not a security.
