Ripple CTO Asks SEC About Ethereum Security Status 

Ripple CTO David Schwartz has hit the SEC with a question regarding the security status of Ethereum, the second-largest cryptocurrency by market cap.

David Schwartz, the Chief Technology Officer (CTO) at Ripple Labs, recently directed a thought-provoking question to the U.S. SEC regarding the security status of Ethereum (ETH).

SEC Warns About Fake News

For context, earlier this week, Cointelegraph informed the crypto community that the SEC had approved BlackRock’s application for a spot Bitcoin exchange-traded fund (ETF).

The news caused the prices of top crypto assets, including Bitcoin, to skyrocket tremendously. According to CoinGecko data, the price of BTC spiked above 10%.

However, the rally was short-lived as Cointelegraph updated the community that the news came as a result of misinformation. This update immediately caused the prices of cryptos to crash to their former levels. 

In a recent X post, the SEC warned the public to be careful about the things they “read on the internet.” It emphasized that “the best source of information about the SEC is the SEC.” 

Ripple CTO Asks About ETH Security Status

Reacting, Schwartz asked the regulatory agency whether it thinks crypto traders selling ETH on digital exchanges are selling securities. The Ripple CTO added that he would like to get a response from the SEC, which he referred to as the best source.

Awesome. Does the SEC think people selling ETH on exchanges are selling securities? I'd like to hear from the best source. https://t.co/Mvgaa9DgUH

— David "JoelKatz" Schwartz (@JoelKatz) October 17, 2023

The SEC has yet to respond to Schwartz’s question at the time of writing this line. 

Crypto Fans React

Expectedly, Schwartz’s remark attracted the attention of the broader crypto community, as members took to the comment section to react.

Tony Edward, the host of the Thinking Crypto podcast, shared a gif illustrating how SEC chair Gary Gensler would react to questions about Ethereum. As per the post, Edward was suggesting that Gensler would prefer to run away from Ethereum-related questions.

Gary Gensler when he has to answer any questions about Ethereum pic.twitter.com/8ccytSG0wB

— Tony Edward (Thinking Crypto Podcast) (@ThinkingCrypto1) October 17, 2023

Furthermore, pro-XRP lawyer Fred Rispoli also reacted to Schwartz’s recent X post.

Pursuant to the SEC's signed filings before a federal judge in our case in S.D. Cal., the SEC represented that it has not made a decision one way or another as to this exact question.

— Fred Rispoli (@freddyriz) October 17, 2023

Rationale Behind Schwartz’s Question

It is not surprising to see Schwartz ask the SEC about the security status of ETH secondary market sales. In the SEC v. Ripple lawsuit, the regulator alleged that Ripple’s programmatic sales of XRP on digital exchanges constitute an investment contract – a special type of securities.

Even after a federal court ruled that XRP secondary market sales did not violate securities law, the SEC still thinks the ruling poses controlling questions of law.

Its attempt to file an interlocutory appeal challenging the decision failed as the court denied the request. Notably, Schwartz is eager to know whether the SEC would also make a similar argument about the security status of ETH – an asset believed to be the commission’s favorite.

Crypto Enthusiasts See ETH as SEC’s Favorite

The crypto community believes that the commission has been creating a favorable regulatory environment for ETH to the detriment of other digital currencies.

The June 14, 2018, speech given by William Hinman, former director of SEC’s Corporation Finance, is a good case in point. Recall that Hinman declared BTC and ETH as non-securities during the controversial speech.

Although Gensler has been reiterating that BTC is the only crypto outside the SEC’s regulatory purview, many still think the agency favors ETH over other assets.