Lawyer Faults The SEC Over “Inconsistent” Crypto Regulation

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  • Ether qualifies as a security based on the classification by Gary Gensler and Joseph Lubin.
  • Lubin said buying tokens in large quantities, or speculating qualifies them as securities.
  • Gensler said Lubin bought Ether in large quantities to speculate.

According to Steven Nerayoff, an attorney and blockchain pioneer, Ether qualifies as a security based on the classification by Gary Gensler, the SEC chair, and the actions of Joseph Lubin, the co-founder of Ethereum. 

Nerayoff used logical analysis of statements made by Lubin and Gensler at separate events to deduce a curious conclusion. According to Nerayoff Lubin said that buying a particular crypto token in large quantities or speculating on it qualifies such crypto tokens as a security. The blockchain expert also noted Gensler’s comments, where he confirmed that Lubin was a venture capitalist (VC) who bought Ether in large quantities to speculate.

In his post, the attorney attempted to expose the contradiction between both party’s positions and emphasize the inconsistency in the SEC’s approach toward crypto regulation. Nerayoff metaphorically confirmed that Ether should be classified as a security, judging by Lubin and Gensler’s positions, per their recent comments.

Nerayoff’s post referenced a video where Lubin described Ether as a consumer token. In the video, the Ethereum co-founder explained that Ether is used to pay for numerous processes in the decentralized world. Hence, it is a token that represents a way of offering shared resources to the world.

Speaking on the challenges with regulators, Lubin explained that his team is focused on the securities law and can issue investor tokens or tokenized securities and consumer utility tokens like Ether that wouldn’t be considered as securities. He noted that they focus on getting clear definitions and helping regulators around the world understand that there are network business models that benefit from membership tokens or tokens that represent the consumption of scarce resources.

According to Lubin, as long as companies are selling the crypto tokens to buyers that use them and not selling in large quantities to speculators hoping to make money by the actions of others, the tokens could be described as consumer tokens.

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