SEC charges crypto influencer, appears to suggest all Ethereum (ETH) transactions fall under US jurisdiction
The US Securities and Exchange Commission (SEC) is charging crypto influencer Ian Balina with his alleged involvement in the 2018 Initial Coin Offering (ICO) of the SPRK token.
In a complaint filed in the US District Court for the Western District of Texas on September 19, the SEC says it is taking legal action against Balina for allegedly promoting and selling crypto assets, which the regulator claims are an unregistered security.
The SEC further accuses the YouTuber of failing to disclose the amount he received from the coin issuer, software development firm Sparkster, and of having his own unregistered offering of SPRK.
“Although he agreed to receive a 30% bonus from Sparkster on the tokens he purchased in the Sparkster offering, Balina never disclosed the remuneration he received for the promotion.
Balina also organized on Telegram an investment pool of around fifty individuals. After he agreed to buy SPRK tokens from Sparkster, Balina offered members of the investment pool the opportunity to buy SPRK tokens from him when they were released.”
The offering, which was conducted through the Ethereum (ETH) network, raised $30 million from nearly 4,000 investors from the US and abroad who paid in ETH.
In an effort to establish US jurisdiction over the case, the SEC says that Ethereum-based transactions are considered to have occurred in the country because a large percentage of the network’s nodes are based here.
“The US-based investors in Balina’s pool irrevocably committed to the transaction when they sent their ETH contributions from the US to Balina’s pool. At that point, their ETH contribution was validated by a network of nodes on the Ethereum blockchain, which is clustered more closely in the United States than in any other country. As a result, these transactions took place in the United States.”
The SEC files the complaint as it takes a tougher stance on crypto inhibiting institutional entry into the digital asset space. During a congressional hearing last week, SEC Chairman Gary Gensler so that most crypto firms trade in securities and must register with the commission. He also suggested that Ethereum could now be classified as one Safety after the completion of the proof-of-stake merger.
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