Famous U.S. Lawyer Fears SEC May Classify ETH as a Security After Ethereum Merge

Deaton thinks the SEC may go after ETH after the Ethereum Merge upgrade launches. 

Attorney John Deaton, the founder of CryptoLaw, recently expressed fears over the possibility that the United States SEC could classify Ethereum (ETH) as security after the Merge upgrade is live.

Deaton asserted in a recent tweet by referring to a comment made by the Chairman of SEC Gary Gensler. The SEC chairman said Bitcoin is the only crypto asset he could comfortably refer to as a non-security. The statement also suggests that Gensler is not willing to categorize ETH as a non-security despite the early comment made by William Hinman in a 2018 speech. 

“Based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions,” Hinman said in a 2018 speech that has continued to cause controversies. 

Attorney Deaton Fears for Ethereum

Commenting on the recent comment by the SEC Chairman, attorney Deaton said: 

“Recently, Gensler said he is ONLY comfortable declaring Bitcoin a commodity. Which literally means he is uncomfortable and unwilling to declare #ETH a commodity and thus a non-security, despite what Bill Hinman said in 2018.” 

Deaton said he fears that Gensler will likely claim that the upcoming Ethereum Merge has repackaged ETH to become security. Thus, allowing him to argue that his position that ETH is security is consistent with Hinman’s November 2018 comment. 

I hope you and @ethereumJoseph @ethereum and @ConsenSys are confident that my fear is misplaced. I also hope you don’t believe I somehow lost my right to be protected from SEC overreach, like I have as an #XRPHolder.

— John E Deaton (214K Followers Beware Imposters) (@JohnEDeaton1) September 12, 2022

“Of course, with Gensler doubling the SEC’s staff dedicated to Crypto enforcement, opening new offices dedicated to Crypto, silencing the former SEC Crypto Czar, and now targeting the exchanges, it would be smart to help end the division,” Deaton added. 

Crypto Investors Lose Trust in SEC

Deaton’s fear comes following the ongoing lawsuit between Ripple and the Securities and Exchange Commission. The events that have been reported in the lawsuit have planted an unpleasant picture of the SEC in the minds of cryptocurrency enthusiasts, especially supporters of the cryptocurrency project. 

The SEC has yet to provide clear regulatory guidelines for the emerging market, with many accusing the commission of preferring regulation by enforcement tactics instead of regulation by rules. 

Deaton has been among the top people who have continued to speak out against the SEC’s regulatory approach to the crypto space.

As reported by The Crypto Basic Chamber of Digital Commerce CEO yesterday said SEC’s denial of 16 Bitcoin ETF applications was mostly influenced by a Political Agenda.

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