Attorney Morgan says the SEC is not classifying Ethereum as a security but investigating whether certain transactions involving the offer and sale of ETH constitute investment contracts.
Renowned XRP advocate and lawyer, Bill Morgan, has taken to X to correct Congress on misconceptions surrounding the classification of Ethereum as a security.
Congress Labels SEC Actions Toward Ethereum as Contradictory
Attorney Morgan made the correction while reacting to an X post by the U.S. House Committee on Financial Services claiming that the Securities and Exchange Commission (SEC) classified ETH as a security.
The committee, which oversees the U.S. financial services industry, stated that the SEC’s attempt to give ETH the securities tag contradicts previous statements made by its chairman, Gary Gensler, regarding the regulatory status of the second-largest cryptocurrency.
For context, during a congressional hearing last year, Gensler refused to respond to inquiries about whether ETH is security.
The Republican arm of the Financial Services Committee emphasized its dedication to holding the SEC accountable for its perceived regulatory overreach.
Pro-XRP Lawyer Corrects Congress
As expected, the development elicited reactions among crypto proponents with Attorney Morgan correcting Congress’ misconception about the matter.
Morgan clarified that the SEC is not moving to classify ETH as a security. Instead, the regulatory agency is investigating whether specific transactions involving the offer and sales of ETH constitute investment contracts.
The pro-XRP lawyer highlighted the need for Congress to identify the difference between classifying an asset as a security and investigating whether certain transactions involving the asset qualify as securities.
This is not even accurate. The SEC is not classifying ETH as a security. It is investigating whether offers or sales of Ethereum are securities. Understand the difference. Obviously members of Congress did not read the summary judgment of Judge Torres in SEC v Ripple which shows… https://t.co/dpW12HrC7t
— bill morgan (@Belisarius2020) April 30, 2024
He criticized the policymakers for failing to read the summary judgment decision in the SEC v. Ripple lawsuit. According to Morgan, the ruling judge held that a token in itself is not a security, but certain transactions involving the token may be an investment contract.
In particular, the judge Analisa Torres ruled that XRP in itself is not a security. However, she declared that Ripple violated securities law when it offered and sold XRP to institutional clients.
Similarly, the SEC’s investigation focuses on whether certain ETH transactions constitute securities.
Consensys Moves to Stop SEC From Giving ETH the Security Tag
News about the investigation went viral in March after Forbes reported that the SEC had issued a subpoena to the Ethereum Foundation.
Prior to issuing a warrant to the Ethereum Foundation, the SEC also subpoenaed other top U.S.-based crypto businesses regarding its investigation.
With all indications pointing to the SEC’s efforts to put ETH under its regulatory purview, Consensys, a private blockchain firm and major Ethereum supporter, sued the regulatory agency in a Texas federal court last month. Consensys aims to stop the SEC from classifying ETH as a security.
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