Serious allegations have emerged surrounding the U.S. SEC and Ethereum, leading some key players to assert that the agency might not take Ripple to trial to avoid exposure of its past dealings.
The accusations come from Steven Nerayoff, a prominent crypto community figure, and an early Ethereum adviser. Nerayoff’s comments have triggered the attention of the broader community, eliciting speculation about the impact of further revelations.
As a result, industry figures like Yassin Mobarak, founder of Dizer Capital, suggest that the SEC may never take Ripple and its top executives, Brad Garlinghouse and Chris Larsen, to trial. Mobarak believes the agency would want to avoid trial to keep these secrets hidden.
According to him, if the regulatory watchdog proceeds to trial in its case against Ripple, the firm could invite Nerayoff to shed more light on his allegations, potentially exposing secret dealings that could incriminate the agency.
Ripple executives could simply call @StevenNerayoff to the stand and expose the skeletons in the SEC closet. How could these executives be expected to know, back in 2013-2018, that XRP… https://t.co/r7iQNZDzns
— Yassin Mobarak 🪝 (@Dizer_YM) September 17, 2023
Allegations Surrounding SEC
The heart of these allegations lies in the SEC’s past engagements and historical entanglement with Ethereum, especially during Ethereum’s initial coin offering (ICO) phase.
Nerayoff hinted at potential corruption within the SEC, challenges in identifying true Ethereum ICO buyers, and even personal persecution. Though vague, the revelations have already raised questions about the SEC’s credibility.
One of the critical points revolves around the integrity of the current SEC leadership. Nerayoff made comparisons with former SEC Chair Joe Grundfest. This raised concerns about whether the agency upholds the same standards it once advocated.
Ethereum ICO’s Possible Violations
Furthermore, Neyaroff claimed it’s challenging to identify the number of investors that participated in the Ethereum ICO, fueling speculations that some whales might be concealing their true positions.
This revelation raises significant questions about the transparency of the ICO process and the potential implications for Ethereum.
Another serious accusation revolves around potential Terms of Service (TOS) violations by Ethereum during the ICO phase. The implications of such violations could have far-reaching consequences for the project.
Nerayoff’s allegations further suggest that Ethereum might have been aware of certain entities holding substantial amounts of Ether (ETH), hinting at a concentration of ETH holdings among a select few. This challenges the principles of decentralization.
It bears mentioning that former SEC official Bill Hinman, in his infamous June 2018 speech, suggested that Ethereum should not be classified as a security because it has attained “sufficient decentralization.”
FBI and DoJ’s Involvement
Furthermore, Nerayoff also claims that he was personally targeted and discredited by the SEC, in conjunction with the Department of Justice (DOJ) and the FBI. However, he points out that the charges against him were eventually dismissed based on government documents.
Recall that pro-XRP lawyer John Deaton previously called attention to how the FBI dropped its case against Nerayoff. The government had charged him in 2019 for alleged extortion. However, they withdrew the case in May 2023.
Responding to the incident, Deaton questioned why the government would go through the trouble of getting an indictment to withdraw the case later on. The attorney speculated that Neyaroff’s previous allegations against the government could be factual.
While captivating, Neyaroff’s latest accusations against the SEC and Ethereum are vague, giving room for interpretations. When a community figure sought clarification, his lawyer stressed that the necessary facts would come out at the opportune time.
Given that more secrets surrounding the SEC and Ethereum could come to light, industry players believe the agency might not want to push for a trial in the Ripple lawsuit.
Recall that the judge presiding over the SEC vs. Ripple lawsuit recently ruled that most of Ripple’s XRP sales did not constitute securities offerings except sales to institutional clients.
This ruling delivered both Ripple and the SEC partial victories. However, the SEC has expressed its intention to appeal the part of the ruling it lost, signaling a determination to sustain its legal action against Ripple further.