NYAG declares ETH as a Security

[adaseb]

So today NYAG decided to go after Huobi and says ETH is a security. Do you agree to this?

From what I understand, Bitcoin is not a security because it’s POW and because it wasn’t pre-mined. Satoshi never had an ICO of any kind. He started to mine at block 1 and when the network activity took off he stopped mining shortly after.

ETH is tricky because right now it’s not POS and when it was created it had an ICO. Price was like $0.50 per ETH in 2014 or around.

So what do you think?

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[Charles-Tim]

So today NYAG decided to go after Huobi and says ETH is a security. Do you agree to this?

New York state Attorney General Letitia James filed a lawsuit against Kucoin, not Huobi. The lawsuit is about how she was able to register and buy coin from New York using Kucoin.

ETH is tricky because right now it’s not POS and when it was created it had an ICO. Price was like $0.50 per ETH in 2014 or around.

You mean that ether is PoS as it has been upgraded from PoW to PoS which makes it centralized and to be considered a security, but it has been a security before it was created because it was pre-mined.

Ether is a security.

I wonder what United States Commodity Futures Trading Commission chair, Rostin Behnam which first says bitcoin is the only commodity now recently changed his mind saying ether and stable coins are commodity too, but he is wrong in my opinion.

[hugeblack]

Does it matter what grading the coin is? In other words, if Bitcoin were classified as valueless, would this make a difference?
The real problem with Ethereum is the centralization of the network at some point, as long as there is centralization then the government can make changes such as banning people from using it and so on.
But personally, I don't really care about classifing.

[OgNasty]

It is no doubt that this is bad news for Ethereum but I’m not sure this is the end I’ll be all of the security conversation. There are so many alt coins out there that I think something a little more official and broad is going to have to be applied to them all. I also don’t think Ethereum is the biggest offender of security actions. This is starting to look like the beginning of the end for alts though.

[thecodebear]

Just to be clear ETH hasn't been declared a security, but the NY AG is trying to make that case in a lawsuit against Kucoin. Of course it is ridiculous because NY state is incredible strict with anything having to do with finance, so getting permission to operate a crypto exchange in NY state is much harder than any other place in the country. Which means NY state has for years been allowing exchanges to have ETH on their platforms in NY state, with the full consent of their financial regulating body, but now all of a sudden the NY AG is acting like this wasn't the case and like allowing NY residents access to ETH buying/selling is illegal in the state lol.

But its all part of a broader effort by people like the NY AG and Gensler at the SEC to build up to trying to make the case that ETH is a security which would mean that nearly all cryptocurrencies outside of Bitcoin are securities. It seems the strategy they are taking is one of tyranny in which instead of just telling exchanges hey we view this as a security now please register to offer securities then are instead going after exchanges and fining them and trying to get them to shut down services after the fact even though there was no law or rule in place.

But given the fact that ETH was sold in a pre-mine for profit of the company/orgranization that founded it (like just about all cryptocurrencies that are around these days), plus that it is not PoS which essentially offers profit for holding (staking) it, there is definitely a case to call it and just about everything else in Crypto (not Bitcoin) a security. Though given that cryptocurrencies are a brand new thing and totally different that legacy finance we would hope the regulators would take a fairly light approach to such things, or at least if they decide these things are securities allow exchanges and crypto companies a grace period to get in line with these judgements the regulatory bodies are just now making. Unfortunately the regulators currently in place don't seem to have much interest in protecting customers but just want to attack crypto. So yeah this is pretty scary for crypto because worst case scenario is they eventually say all crypto exchanges and services that offer anything other than Bitcoin and a handful of the older PoW cryptos are in violation and they'll act like that was always the rule and so try to shut them down. That would be straight up tyrannical but that seems to be the way Gensler as well as the NY AG are going.

[bittraffic]

So today NYAG decided to go after Huobi and says ETH is a security. Do you agree to this?

New York state Attorney General Letitia James filed a lawsuit against Kucoin, not Huobi. The lawsuit is about how she was able to register and buy coin from New York using Kucoin.

ETH is tricky because right now it’s not POS and when it was created it had an ICO. Price was like $0.50 per ETH in 2014 or around.

You mean that ether is PoS as it has been upgraded from PoW to PoS which makes it centralized and to be considered a security, but it has been a security before it was created because it was pre-mined.

Ether is a security.

I wonder what United States Commodity Futures Trading Commission chair, Rostin Behnam which first says bitcoin is the only commodity now recently changed his mind saying ether and stable coins are commodity too, but he is wrong in my opinion.

SEC already decided that all cryptocurrencies are Security except Bitcoin. Anyone holding ETH must have been expecting this to happen but not from NYAG but this would only make the situation worse since it gives SEC the confirmation. So what makes the NYAG have the power to declare which is Security and which is not?

All because she can buy coins from Kucoin she filed a lawsuit. LOL Aren't people grateful when they can buy and invest?  Maybe she should check if she could withdraw it.

[zasad@]

I understand that crypto exchanges have made a lot of money and can be fined, but the Attorney General of New York has very little power to compete with ethereum lobbyists. It's more like pumping FUD to bring down prices in the markets.

[btc_angela]

I understand that crypto exchanges have made a lot of money and can be fined, but the Attorney General of New York has very little power to compete with ethereum lobbyists. It's more like pumping FUD to bring down prices in the markets.

And the timing though of this kind of news, I mean we don't know if this is intentional or not.

On the contrary,

SEC chairman Gary Gensler has made it clear that he believes Ether is a security — especially following last year's switch to a Proof-of-Stake consensus mechanism.

But in the latest sign of growing tensions between U.S. regulators who are grappling for oversight of the crypto sector, CFTC chairman Rostin Behnam has indicated that he disagrees.

Speaking to U.S. politicians on the Senate Agriculture Committee, Behnam maintained that the world's second-largest cryptocurrency should still be regarded as a commodity — meaning that it would fall under his agency's purview.

https://coinmarketcap.com/alexandria/article/cftc-doesn%27t-believe-ether-is-a-security-going-against-sec%27s-judgment

So even themselves are not sure about how and what ETH is. And it seems both of this US government agency will be bickering against each other, sort of power grab as who is going to handle the whole crypto regulations in the US.

[el kaka22]

I think the start could be a security, but right now it is not a security. How could I put this more delicately, at the start gold coins were a security because everyone had gold, but only some people could turn gold into gold coins, which means gold was a security, but overtime it became not a security right?

It wasn't owned by anyone, it was owned by everyone equally if they paid. Same logic, sure ETH had an ICO (pow or pos shouldn't matter) but right now there is no central figure that could make it go up and down, or freeze it, or take it back or whatever. It is all ours and we decide it collectively as people which should mean it is not a security.

[o48o]

Does it matter what grading the coin is? In other words, if Bitcoin were classified as valueless, would this make a difference?
The real problem with Ethereum is the centralization of the network at some point, as long as there is centralization then the government can make changes such as banning people from using it and so on.
But personally, I don't really care about classifing.

Oh it matters. Like ton of investors and devs would avoid participating in the ethereum ecosystem and by doing so would reduce liquidity.
And most likely only biggest most regulated exchanges could even list it. Reducing the number significally.

Developers would think twice using it as a platform, and if eth is security, how layer 2 tokens wouldn't be as they are part of the same system? And it would be just a matter of time until this would affect on every coin and token out there. And that's probably only a surface as i am not an expert.