The U.S. Securities and Exchange Commission (SEC), under the leadership of Gary Gensler, is allegedly secretly supporting Ethereum and is heavily influenced by the Chinese Communist Party, according to Web3 lawyer Steven Nerayoff.
With growing speculation around an Ethereum ETF, it’s evident that the SEC, led by Gary Gensler, is more involved in ETH than it appears. Gensler’s indirect approval for @PrometheumInc to designate ETH as a security effectively endorses an ETF covertly.
This decision shows that… pic.twitter.com/i0TVEdLDfq
— Steven Nerayoff (@StevenNerayoff) February 12, 2024
“With the growing speculation around an Ethereum ETF, it becomes evident that the SEC is more closely involved with ETH than it seems. […] For Gensler, Joseph Lubin, and Vitalik Buterin, the stakes go beyond investor interests. Their decisions have set the team on an irreversible course,” he added.
Nerayoff believes that the indirect approval by the regulator in May 2023 enabled Prometheum to classify Ethereum as a security.
Later, the CEO of the firm, Aaron Kaplan, addressed the U.S. Congress, supporting the agency’s policy. He had previously been suspected of ties with Chinese organizations Shanghai Wanxiang Blockchain and HashKey.
Subsequently, Republican Senator Tommy Tuberville urged the Department of Justice and the SEC to investigate Prometheum’s activities.
According to TruthLabs, the Chinese Communist Party allegedly controls approximately 66.6% of ETH supplies.
The CCP has taken over Crypto by being Ethereum’s largest hidden whale, with an ownership estimation on my end of near 66.6% of the Eth supply today. They’ve clearly compromised the SEC, and CFTC, with Prometheum being given the ONLY Special Purpose Dealer Broker license for… pic.twitter.com/C5eCrGUH7d
— TruthLabs ? (@BoringSleuth) February 8, 2024
“They’ve clearly compromised the SEC and CFTC, obtaining for Prometheum the only Special Purpose Dealer Broker license for digital assets,” the researchers added.
Nerayoff, in partnership with TruthLabs, is preparing a fraud lawsuit against the Ethereum Foundation, Buterin, and Lubin. It is not yet known when the claim will be filed in court.
In 2021, Fox Business published an extensive investigation in the context of the SEC’s case against Ripple. According to journalists, the regulators who filed the lawsuit might have been affiliated with Ethereum.
The non-profit watchdog Empower Oversight also identified a potential conflict of interest in the actions of former senior SEC officials.
However, in 2023, Cardano founder Charles Hoskinson challenged the conspiracy theory known as ETHgate. He believes that the statement made last summer by former SEC Corporate Finance Director William Hinman in 2018 about Ethereum’s regulatory status demonstrates not regulatory corruption but “favoritism.”
In April, the CEO of SkyBridge Capital criticized Gensler for the “mess” at the SEC. That same month, Republicans in Congress reproached the official for his unclear stance on cryptocurrencies.
In June, lawmakers introduced a bill to dismiss Gensler. In August, following Grayscale’s court victory against the SEC, the proposal to replace the agency’s head resurfaced.