Ethereum co-founder Joseph Lubin praised SEC Chair Gary Gensler as a “shining knight of decentralization.”
Speaking at ETHDenver (which ended on March 5,) Lubin spoke candidly about recent regulatory enforcement actions, holding Gensler as a catalyst for driving decentralization – much to the audience’s jeers.
Digital Asset Investor The relevant part of Fireside Chat was clipped and uploaded. It was posted to YouTube on March 14.
Co-founder of Ethereum says SEC does a great job
Using the recent example of SEC enforcement action against Kraken, Lubin said the exchange’s staking product was centralized – therefore, a security offering.
He added that claims of it being decentralized did not stand up when Kraken’s efforts generated the yield paid to stakers.
“If you advertise that you’re a very decentralized thing in such a way that it sounds like people are going to make money based on your effort, just that language can make it a security.”
The Howey Test is used to determine whether a transaction, scheme or contract meets the definition of security under securities laws. It examines whether investors invested money in a common enterprise expecting to reap the benefits of the other’s efforts.
Lubin said that Gensler and the SEC “are doing a great job of driving projects in our ecosystem to radically decentralize themselves” – instilling that point by calling Gensler a “shining knight of decentralization.”
Kraken, which was accused of operating an unregistered security offer through its staking programs, settled with the SEC on February 9th, paying a $30,000,000 penalty.
Coinbase said that it was ready to defend its staking programs in court if needed.
Everyone is not on the same page
The crypto community has been critical of recent regulatory rumblings and a history of unfair enforcement actions.
Ripple CEO is one example. Brad Garlinghouse Rejecting claims that compliance can simply be achieved by registering, he said: He claimed that such a registration process does not exist and there is no clarity as to what constitutes a compliant registered token.
“Chair Gensler continues to harp that firms simply need to come in and register, but the truth is there’s no infrastructure in place for a “registered token” to trade nor any clarity as to what these tokens are.“
SEC Commissioner Pierce echoed Garlinghouse’s sentiment, saying she is unsure whether registering a staking product is possible. There are still many unanswered questions about how a staking product would be regulated. This includes whether it would be registered and what tokens would be included in the program.
Gensler was also fun. @DecentFiJC said, “There’s a 0% chance he didn’t know about this,” in reference to the shady relationship between FTX and sister company Alameda.
It was alleged that Alameda had a $65 billion secret line of credit from FTX, funded by customers’ exchange deposits without their knowledge or consent.