The Securities and Exchange Commission is still acting up. Criticized for his often ambiguous approach to the cryptocurrency sector, he just ruled in a recent case that “Ethereum transactions should be treated as originating in the United States. This is because most of the nodes are really there. She concludes from this that she is competent to judge the case before her.
Sometimes described as power-hungry, the SEC is indeed constantly trying to expand its jurisdiction. A common occurrence and principle for Americans, who have an arsenal of legal rules that allow them to be competent even when business is carried out far – even very far – from home. And, unfortunately, it is obvious that the cryptocurrency industry is no exception to this rule and even pays for it. Indeed, the SEC is multiplying investigations and actions against companies or powerful people in the sector, no matter where they are based, as long as the US market is affected in any way.
And this time around, that statement is, to put it mildly, astonishing—even audacious? – what the SEC dared to report yesterday. Although in some ways she is not entirely wrong.
SEC – What are the circumstances of the case?
Under the terms of the white paper, the SEC is suing Youtuber and crypto researcher Jan Balina for conducting and distributing undisclosed Ethereum-based ICO promotions. Balina created an investment pool on the Telegram network back in 2018 and conducted his (unregistered) SPRK token offering there. In fact, Balina put himself in a situation of lawlessness, since at that time the authorities were not informed. Another accusation, the SEC accuses him of hiding the amount of compensation received in exchange for the promotion carried out for Sparkster (SPRK) tokens. As for the company behind Sparkster, it is the subject of several calculations. Including the fact of the sale of securities not registered by the US authorities to investors located in the country.
SEC Claims Jurisdiction Due to Significant U.S. ETH Node Presence
And, of course, it was necessary to find an argument in order to support and establish, all the more, his competence. According to the regulator, there is nothing easier. Suffice it to say that “Ethereum transactions should be considered as being made in the United States. This is because ETH validators are more densely concentrated in the United States than in any other country. And that when investors participated in the Balina investment pool, Ether (ETH) deposits were verified by a network of nodes on the Ethereum blockchain. Accordingly, he believes that the transactions did take place in the United States. If his argument to monopolize competence can be criticized on various aspects, it is nevertheless a reality.
Indeed, the Ethernodes website backs up their claims by demonstrating that
3356 i.e. 42.90%, nodes are present (out of a total of 7807 Ethereum nodes). What makes the USA the best student in the world. In comparison, Germany is in second place, ahead of France, with 909 or 11.62% of ETH nodes.
It is still difficult to determine the outcome of such a dispute. And it looks like the reviews are pretty mixed at the moment. However, an Australian lawyer tells Cointelegraph that this information will not matter much during a possible trial.
“The fact that we have a plaintiff based in the United States, a defendant based in the United States, and transactions originating in the United States is the most important thing here. It doesn’t matter if the payment was made via Ethereum, Mastercard or any other payment network. Here the defense can accept jurisdiction, and if they do, then it will not be a problem, and if it is not a contested issue, then the court will not say anything about it. Any concerns about legal precedents at this stage are premature. »
Aaron Lane, Australian lawyer.
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