Crypto advocacy group Coin Center spelling out why it believes Ethereum (ETH) is not a security, despite claims to the contrary coming from New York Attorney General (NYAG) Letitia James.
In a new lawsuit against the crypto exchange Kucoin, Attorney General James argues 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 the NYAG’s assertions 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 be monitoring the case and if there’s 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 common 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 profits.
“The value of Ether and the functionality of the Ethereum network is not reliant on the [Ethereum] Foundation, rather it flows from the efforts of thousands of unaffiliated developers, miners, and users…
Conflating the pre-sale and the running network is confused analysis that could be misunderstanding the tech or the law or both.”
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