Here’s why Ethereum isn’t a security, according to Crypto Think Tank Coin Center
Crypto advocacy group Coin Center explains why it believes Ethereum (ETH) is not a security, despite claims to the contrary by New York Attorney General (NYAG) Letitia James.
In a new lawsuit against crypto exchange Kucoin, Attorney General James argues that Ethereum is a security that relies on the efforts of third-party developers to generate profits for its holders.
The attorney general calls ETH “a speculative asset” and placed the leading smart contract platform in a group with the collapsed crypto project Terra (LUNA) and its algorithmic stablecoin TerraUSD (UST).
Coin Center’s Director of Communications Neeraj Agrawal refutes NYAG claims and says the think tank’s view on Ethereum remains unchanged.
“Obviously, we disagree with the NYAG’s argument that ETH is a security. Coin Center will monitor the matter, and if there is an opportunity to weigh in, we will.”
In 2018, Coin Center published a blog post explaining why it believes Ethereum is not a security. The group argued that while Ethereum may have met one of the prongs of the Howey test when it was issued in 2014, ETH in its current form today is not a security.
Under the Howey framework, a transaction represents an “investment contract” if a person “invests his money in a joint enterprise and is led to expect profits solely from the efforts of the promoter, sponsor, or other third party.”
According to Coin Center, Ethereum in its current iteration is “too useful and too decentralized” and that ETH’s value does not rely on the efforts of a discernible third party to generate profit.
“The value of Ether and the functionality of the Ethereum network are not dependent [Ethereum] Foundation, rather it flows from the efforts of thousands of unaffiliated developers, miners and users…
Conflating the pre-sale and the ongoing network is a confused analysis that may be a misunderstanding of the technology or the law or both.”
At the time of writing, Ethereum is trading at $1,466.
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