The Securities and Exchange Commission (SEC) has made an unprecedented claim that ethereum transactions take place in the United States because ETH nodes are “more densely clustered” in the United States than in any other country.
SEC debate Found in a Sept. 19 lawsuit against cryptocurrency researcher and YouTuber Ian Balina, which alleges, among many other complaints, Balina ran an unregistered Sparkster (SPRK) while forming an investment pool on Telegram in 2018 Token issuance.
The SEC claims that a network of nodes on the ethereum blockchain validating ETH contributions while U.S. investors participate in Balina’s investment pool “are more densely clustered in the U.S. than in any other country.”
The SEC argued that, therefore, “these transactions took place in the United States.”
At this stage, it is unclear whether such a claim will stand in court, or if there is any legal precedent. However, 42.56% of the 7807 Ethereum nodes currently located in the US according to to the ether node.
Speaking to Cointelegraph, Dr. Aaron Lane, an Australian lawyer and senior fellow at RMIT’s Centre for Blockchain Innovation, said that the distribution of Ethereum nodes is largely irrelevant to the case at hand, explaining:
“The fact that we have one U.S. plaintiff, one U.S. defendant, and transactions from the U.S. is most relevant here. It doesn’t matter if the payment is done on Ethereum, Mastercard, or any payment network.”
Lane said that while the SEC’s claims are interesting, he added that even if Balina’s attorneys don’t contest the jurisdictional issue, it won’t have any impact on future cases at this time:
“The defence may be conceding jurisdiction here, if they do it won’t be an issue, and if it’s not an issue at issue then the court won’t comment on it. Any concerns about legal precedent at this stage are too late Too early.”
The SEC has previously Criticized for its regulatory approach to cryptocurrencieswhich is called “law enforcement regulation” by some.
SEC Chairman Gary Gensler recently hinted that, Ether-based staking could also trigger U.S. securities laws Soon after Ethereum transitioned to Proof of Stake on September 15th.
Responding to the lawsuit, Ballina said in a 19-part Twitter post that the allegations were “baseless” and that he “refused to settle, so they [SEC] have to prove themselves. “
1/ Official statement on baseless SEC allegations that Ian Balina was compensated for promoting Sparkster:
The charges brought against Mr. Ballina by the SEC Enforcement Division are a baseless effort based on multiple misunderstandings of the facts and the law, enumerated below.
— Ian Ballina (@DiaryofaMadeMan) September 19, 2022
Balina did not comment on the SEC’s assertion that the US should have jurisdiction over Ethereum-based transactions due to the large distribution of US nodes
Balina’s allegations come from Sparkster and its CEO Sajjad Daya recently settle down It filed a lawsuit with the U.S. Securities and Exchange Commission on Sept. 19, agreeing to pay back $35 million to “victimized investors” following its 2018 ICO.