ETH is a Security?! The SEC vs. Ethereum Explained!!
Published: 2024-03-28
Status:
Available
|
Analyzed
Published: 2024-03-28
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
SEC lawsuit against Ethereum entities could lead to a significant price drop for ETH and a broader negative impact on the crypto market.
"if the SEC decides to sue these entities it could have a devastating effect on eth's price and a catastrophic impact on the rest of crypto"
Pending
The SEC has not clarified the decentralization threshold for an asset to be considered not a security, and this clarity was not provided under Gary Gensler's chairmanship.
"the SEC has never specified where this threshold is many hoped to get this Clarity when Gary Gendler became chairman of the SEC in April 2021 but the clarity never came"
Pending
The SEC's investigation into Ethereum entities suggests an upcoming lawsuit alleging ETH is a security and that entities violated securities laws.
"the SEC's investigation of entities in ethereum's ecosystem is significant because it foreshadows a lawsuit wherein the SEC alleges that eth is a security and that these entities therefore broke Securities laws"
Pending
The SEC's investigation into Ethereum entities indicates a significant risk of a future lawsuit.
"it is safe to assume that the SEC wouldn't have begun investigating if it didn't believe there was something to find this means that there is a risk that the SEC will will sue at some point"
Pending
Research suggests the SEC's investigation into Ethereum began after the Chapella upgrade in April of the previous year (2023).
"our research suggests that the SEC didn't begin investigating ethereum until after the chappella upgrade in April of last year"
Pending
Following the Chapella upgrade, Ethereum's asset qualities changed, allowing staking and yield to be practically realized, which may have impacted its regulatory status.
"after the chappella upgrade however eth's qualities as an asset did change because now it could actually be unstaked and earn a yield prior to chappella all of that staking and yield only existed on paper after chappella it went into practice"
Pending
The SEC has likely been investigating Ethereum since April 2023, as this is when ETH's asset status changed, making a lawsuit more viable.
"the SEC has likely been investigating the entities behind ethereum since at least last April this is because April 2023 was when eth's status as an asset changed that made it possible for the SEC to entertain the idea of an ethereum lawsuit without fear of the case being thrown out"
Pending
The SEC appears to be considering two versions of Ethereum. Charles Hoskinson's deleted tweet suggests the investigation might extend back to Ethereum's proof-of-work era.
"the SEC seems to be dealing with two different eths what's spooky is that Charles subsequently deleted this tweet leading to speculation that the investigation could somehow be stretching back to ethereum's proof of work days"
Pending
A Wells notice issued to Ethereum entities would likely cause ETH's price to crash due to the high probability (80%) of an ensuing lawsuit.
"if it does come out that the SEC has issued a Wells notice to entities behind ethereum well then eth's price would probably crash as investors would know that there's an 80% chance that a lawsuit is coming"
Pending
The SEC's scrutiny of Ethereum entities might reduce the likelihood of a spot Ethereum ETF approval.
"the sec's scrutiny of the entities behind ethereum could lower the chance of a spot ethereum ETF being approved"
Pending
Gurbir Grewal is likely to push for enforcement action against crypto, aligning with his stated goal of regulating the industry through enforcement.
"it looks like there's a high chance that geria will push for an enforcement action given his explicitly stated goal of regulating the crypto industry by enforcement"
Pending
The SEC might initiate enforcement action against Ethereum before the final spot Ethereum ETF decision dates in late May.
"the SEC could launch an enforcement action before the final spot ethereum ETF decision dates in late May"
Pending
An enforcement action against Ethereum, the second-largest cryptocurrency, would be a significant move to gain political attention, with Gary Gensler likely to be credited.
"cracking down on the second largest cryptocurrency and there's no doubt that Gary would ensure that his name is included on the press release just like it was in the sec's lawsuit against coinbase"
Pending
The current situation suggests a negative outlook for Ethereum and the broader crypto market in the near future.
"this all paints a bleak picture for e and the rest of the crypto Market in the coming months"
Pending
An SEC lawsuit against Ethereum poses a significant risk, potentially leading to delistings, a price collapse, and an implosion of its DeFi ecosystem due to leveraged positions in staked tokens.
"the possibility of an SEC lawsuit against ethereum which would be a real tail risk besides the fact that it could result in eth being delisted from crypto exchanges the impact it would have on eth's price could cause an implosion in ethereum's defi ecosystem which has levered up on all sorts of liquid staked and liquid restak Tokens"
Pending
The decision on which crypto projects the SEC pursues is made by the Division of Enforcement, not Gary Gensler or the Commissioners, as three Commissioners are pro-crypto.
"it's actually not Gary who decides which crypto projects the SEC goes after it's not even the Commissioners Who oversee the agency if it were then this investigation wouldn't be happening because three of the five Commissioners appear to be Pro crypto"
Pending
Gurbir Grewal reportedly lacks deep understanding of cryptocurrency and often seeks advice from colleagues within the SEC.
"geria doesn't seem to know much about cryptocurrency in fact geria seems to be overwhelmed by how complex the SEC is so much so that he's frequently contacting other people within the agency for advice"
Pending
Gurbir Grewal indicated the SEC's intention to increase crypto crackdowns in 2024 as a means to restore public trust.
"gerer revealed in an interview last November that the SEC plans to double down on its crypto crackdowns in 2024 believe it or not but he said that people are losing trust in Regulators like the SEC and he seems to think that the solution to restoring this trust is to increase enforcement efforts"
Pending
Gurbir Grewal stated the SEC is working to expedite the pre-Wells period, aiming to accelerate the timeline to lawsuits.
"geria revealed in that interview last June that the SEC is actively trying to shorten the pre-s period put differently they're trying to speed up the time it takes to get to the lawsuit stage"
Pending
Gurbir Grewal's ultimate goal is reportedly to become SEC Chair, which could explain his strong enforcement focus.
"gerbier's endgame is to get Gary's position as SEC chair it would certainly explain his enforcement Focus"
Pending
The SEC's view of ETH as a security could prompt crypto exchanges to delist all assets except Bitcoin.
"the understanding that the SEC sees eth as a security could also scare crypto exchanges into delisting everything but BTC"
Pending
The US would be the biggest loser if the crypto industry leaves the country, especially if the SEC wins a lawsuit against Ethereum.
"the Biggest Loser in all of this however would be the United States as the crypto industry would likely leave the country entirely particularly if the SEC somehow manages to win any lawsuit it might bring against ethereum"
Pending
The SEC investigating Ethereum could lead to a lawsuit where ETH is declared a security, causing a devastating price drop for ETH and a catastrophic impact on the broader crypto market.
"if the SEC decides to sue these entities it could have a devastating effect on eth's price and a catastrophic impact on the rest of crypto"
Pending
If Ethereum meets the Howey Test criteria and is deemed a security, failure to register with the SEC could result in fines and delistings from exchanges.
"if an asset meets all four criteria of the howy test then the third parties involved must register that asset with the SEC and provide regular disclosures failure to do this prior to issuing the asset results in large fines and delistings from any exchanges it's trading on as we have seen with some cryptos"
Pending
In 2018, a former SEC Director stated that Ethereum was not a security due to its sufficient decentralization.
"in 2018 former SEC director Bill Hinman said that eth is not a security because ethereum had become quote sufficiently decentralized"
Pending
The SEC's investigation into Ethereum likely began after the Chapella upgrade in April of the previous year.
"our research suggests that the SEC didn't begin investigating ethereum until after the cha upgrade in April of last year"
Pending
The Chapella upgrade changed Ethereum's asset qualities, allowing for actual unstaking and yield earning, unlike the 'on-paper' yields before.
"after the chappella upgrade however eth's qualities as an asset did change because now it could actually be unstaked and earn a yield prior to chappella all of that staking and yield only existed on paper after chappella it went into practice"
Pending
While the SEC is investigating Ethereum entities, no lawsuit has been filed yet, and it's possible the investigation might conclude without one.
"the SEC has not sued any entities in ethereum's ecosystem at least not yet it's possible that the investigation will turn up empty-handed and that no lawsuit will be filed"
Pending
The SEC's lawsuit against Ripple provides insight into the three stages of an SEC lawsuit.
"the sec's December 2020 lawsuit against Ripple and its Executives gives us the info we need if you watched our first video about the sec's lawsuit against Ripple and Co you may recall that there are three stages to an SEC lawsuit"
Pending
The SEC's investigation into Ethereum's ecosystem has likely been ongoing for an extended period, as the pre-Wells period has no fixed duration.
"the pre Wells period does not have a fixed time frame this means that the SEC has likely been probing ethereum's ecosystem for much longer than a month"
Pending
The initial stage of an SEC lawsuit is the 'pre-Wells' period, where the SEC contacts entities suspected of violating securities laws.
"the first stage is called pre- Wells this is where the SEC reaches out to the entities it believes could have violated Securities laws"
Pending
The SEC's argument for classifying cryptocurrencies as securities includes ICO launch, insider allocation, promotion by the team/foundation, overlapping personnel, staking for yield, and deflationary tokenomics.
"the SEC noted as being Securities had the same things in common they were originally launched via Ico and a portion of the initial Supply was allocated to insiders be they the team company or Foundation the crypto project was promoted by the team company or Foundation the team company and or Foundation had overlapping Personnel the coin or token could be staked to earn a yield the coin or token had a burning mechanism designed to create deflationary tokenomics that increases its price"
Pending
Ethereum potentially meets the SEC's criteria for being a security, having been launched via ICO, with initial supply allocated to the foundation and team, and likely promoted by them.
"as we mentioned in that video all these criteria could be applied to eth it was originally launched via an Ico a portion of eth's initial Supply was allocated to the ethereum foundation and the team eth was likely promoted by the team and the foundation according to the sec's definition of promotion"
Pending
Ethereum's ability to be staked for yield and its deflationary tokenomics through fee burning could be used by the SEC as arguments for it being a security.
"eth can be staked to earn a yield and a portion of all eth transaction fees are burned creating deflationary tokenomics designed to increase eth's price"
Pending
Charles Hoskinson suggested the SEC's investigation into Ethereum focuses on the 2022 transition to proof-of-stake as a new cryptocurrency, rather than its historical ICO.
"Charles hoskinson who's also an ethereum co-founder tweeted this quote the investigation isn't related to historical facts and circumstances around the 2014 Ico but rather to the position that the 2022 transition from proof of work to proof of stake is a new cryptocurrency with a new set of facts and circumstances"
Pending
The SEC intends to intensify its crypto crackdowns in 2024, viewing increased enforcement as a way to restore trust in regulators.
"gerbier revealed in an interview last November that the SEC plans to double down on its crypto crackdowns in 2024 believe it or not but he said that people are losing trust in Regulators like the SEC and he seems to think that the solution to restoring this trust is to increase enforcement efforts"
Pending
The SEC is actively working to expedite the pre-Wells period, aiming to accelerate the timeline to reach the lawsuit stage.
"gerby revealed in that interview last June that the SEC is actively trying to shorten the pre-s period put differently they're trying to speed up the time it takes to get to the lawsuit stage"
Pending
The second stage of an SEC lawsuit is the Wells notice, where the SEC formally communicates its reasons for pursuing legal action against investigated entities.
"the second stage called the wells notice this is when the SEC sends an official letter to the entities it's been investigating explaining why it believes a lawsuit is Justified"
Pending
Statistically, there is an 80% probability of a lawsuit proceeding once the SEC issues a Wells notice.
"the SEC proceeds with a lawsuit in 80% of the cases where it issues a Wells notice statistically speaking a lawsuit is very likely at that point"
Pending
If Ethereum entities receive a Wells notice, ETH's price is likely to crash due to the high probability (80%) of an impending lawsuit.
"if it does come out that the SEC has issued a Wells notice to entities behind ethereum well then eth's price would probably crash as investors would know that there's an 80% chance that a lawsuit is coming"
Pending
A successful crackdown on one cryptocurrency by the SEC could signal that most cryptocurrencies, except Bitcoin, are not safe.
"from the sec's perspective it probably doesn't have to if it can successfully crack down onne that's because it would become clear to everyone that no crypto is safe from the SEC except BTC"
Pending
The SEC's scrutiny of Ethereum entities may reduce the likelihood of a spot Ethereum ETF approval.
"the sec's scrutiny of the entities behind ethereum could lower the chance of a spot ethereum ETF being approved"
Pending
The SEC might initiate an enforcement action against Ethereum before the final spot Ethereum ETF decision dates in late May.
"the SEC could launch an enforcement action before the final spot ethereum ETF decision dates in late May"
Pending
An enforcement action against Ethereum could also occur closer to the November election.
"the second possible window for an enforcement action against ethereum is closer to the November election"
Pending
SEC officials like Gary and Gurbir are driven by political ambition, seeking to advance their careers within the government.
"people like Gary and geria are themselves fundamentally politically motivated they want to keep climbing the rungs of government power"
Pending
Gurbir Grewal's ultimate goal is to secure Gary Gensler's position as SEC Chair.
"gerb's endgame is to get Gary's position as SEC chair"
Pending
Cracking down on the second-largest cryptocurrency would be the most effective way for Gurbir to gain attention from anti-crypto politicians.
"when it comes to appeasing anti-crypto polititions there's nothing that would get geria noticed more than cracking down on the second largest cryptocurrency"
Pending
The crypto industry may leave the United States, especially if the SEC wins a lawsuit against Ethereum.
"the United States as the crypto industry would likely leave the country entirely particularly if the SEC somehow manages to win any lawsuit it might bring against ethereum"
Pending
A price drop in ETH due to an SEC lawsuit could trigger an implosion in Ethereum's DeFi ecosystem, affecting various staked and restaked tokens.
"the impact it would have on eth's price could cause an implosion in ethereum's defi ecosystem which has levered up on all sorts of liquid staked and liquid restak Tokens"
Pending
The ruling that XRP sales on exchanges are not securities offerings might reduce the number of delistings for ETH in the US.
"the bombshell ruling that sales of x RP on exchanges did not constitute Securities offerings could minimize the number of D listings eth would experience in the United States"
Pending
If the SEC classifies ETH as a security, exchanges might delist all cryptocurrencies except Bitcoin, a scenario that would be unprecedented.
"the understanding that the SEC sees eth as a security could also scare crypto exchanges into delisting everything but BTC which would be truly unprecedented"
Pending