Is Ethereum Security? Ripple CTO Breaks Silence

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As a seasoned researcher with extensive experience in the cryptocurrency and blockchain industry, I’ve closely followed the ongoing debate surrounding Ethereum’s (ETH) classification as a security following the U.S. SEC’s approval of Ethereum ETFs.

Following Ethereum‘s latest Exchange-Traded Fund (ETF) rollouts, Coinbase CEO Brian Armstrong praised this action as a significant advancement towards achieving regulatory transparency.

The SEC’s approval of these Ethereum ETFs signifies that Ethereum (ETH) is no longer considered a security by the U.S. regulatory body, according to the Coinbase executive who oversees custody for all eight of the newly authorized Ethereum ETFs.

As a seasoned cryptocurrency investor and observer, I have witnessed numerous debates within the community surrounding the classification of digital assets. The recent announcement of Ethereum’s Merge upgrade has sparked a particularly contentious debate among some members. While some argue that ETH should be considered a security due to its staking model and artificial inflation of value, others vehemently disagree.

Is Ethereum a security?

David Schwartz, the CTO of Ripple, participated in the debate and challenged Ethereum’s characterization as a security. He initiated this discussion by questioning whether Ethereum could be defined as an investment contract. He argued that there isn’t a distinct counterparty involved in such contracts, making it uncertain.

He also challenged the idea that shared interests among Ethereum stakeholders could be considered a unified business venture, which is essential for determining the existence of a security.

As a crypto investor, I’ve noticed that the discussion around market manipulation and fraud in the cryptocurrency industry has gotten quite heated. Schwartz, however, argued against the idea that shared interests automatically equate to a common enterprise. In other words, just because we all have a stake in the crypto market doesn’t mean we’re all working towards the same goals or playing by the same rules. This perspective could potentially be misapplied to other markets as well.

Even if we consider Bitcoin (BTC) as a security, I don’t believe that FTX’s actions constituted technical market manipulation, despite it being fraudulent. The transactions were genuine, and the potential violation may lie in section 9(a)(4) for making false or misleading statements about their trading activities instead.— David “JoelKatz” Schwartz (@JoelKatz) July 24, 2024

I believe FTX’s suspected behaviors could be interpreted as fraudulent, though they may not meet the strict criteria for market manipulation according to legal definitions.

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2024-07-24 12:03