ETH Is Doomed

ETH is a security.

I could end the post here, but I want to help everyone understand why is so bad about ETH being a security?

You can replace ETH with your favorite altcoin, like Cardano or XRP. Solana, whatever you want to talk about, and the question is, if these projects and cryptos are eventually forced to register with the SEC in the U.S. as Securities, is this really such a bad thing? Let me start by saying I'm not a fan of the SEC. They've done a lot of dumb things. They haven't protected investors as well as they should have. For example, they've allowed triple leverage inverse commodity ETFs like some of these crude oil, an other similar things, that sound more like gambling than investment.

If they have allowed those kind of attrocities, they could sue every altcoin that is considered a security. Don't get me wrong, I hope that the SEC sues cardano. I hope they take them to court. I hope Solana gets sued. I hope they sue all of these projects. That would be one of the few good things that my tax dollars could go toward again.

Bitcoin is the only major digital asset that is a digital commodity. It is an asset without an issuer. If you are an asset with an issuer, like xrp, cardano, or eth, you are a security and need to register with the SEC. This is how U.S. securities law works in the 21st century. I would go even further and say that the SEC should also file a lawsuit against coinbase. Gemini, Kraken, Binance, and all the other crypto casinos for letting these unregistered securities be traded on their platforms in the US.

The point of this video is that a lot of altcoiners don't seem to care much about SEC registration for their favorite altcoin. They say things like, "We'll just pay the fine and move on. What's the big deal?"

What will happen when proof-of-stake coins are regulated the same way securities are? I think the people who own these altcoins don't realize how dangerous it would be for their projects if they were forced to register with the SEC. So let's start with the elephant in the room, which we've been saying over and over again for the past 18 months: altcoins are nothing special.

They're just a way to get around securities laws. altcoins are just tokens issued by unregistered software companies that are pretending not to be companies. They might do their ICO in Japan or Switzerland to try to fool U.S. Securities Law, but if you want to sell your tokens in the U.S., you have to follow U.S. Securities Law. If you want to start a new software company, for example, you need a lot of lawyers and paperwork, but if you want to launch a new cryptocurrency, you just need VC's and other institutional investors like these projects because they can fund them and then sell them to retail investors a few months or years later.

Many of you have learned this lesson the hard way over the past year. Most Venture Capital investments, on the other hand, require an acquisition or an initial public offering (IPO) to give the institutional investors and the VC fund and its manager liquidity. This means that they can get out of the investment so they can return the capital and any profits to the investors who put money into their VC fund. As part of an IPO, the company has to make a lot of disclosures, which can take years and years and when a company like Coinbase wants to go public, they file something called an S1 with the SEC. This is a registration statement, and it has a lot of information in it. I don't know how many hundreds of pages this is. It usually starts with some marketing hype, but then they get to the table of contents and we'll see things like the company's financials. At the time of the S1 filing for Coinbase, Brian Armstrong owned 2.7 million shares, which was about 11% of the total. This information needs to be shared with the SEC, and it's likely that crypto projects that want to register with the SEC would have to do the same.

Now imagine that Ethereum had to publish all of these disclosures about itself. If they lied about any of them, the board of directors and the executive executives would be responsible, and they could go to jail if they didn't. So when you read one of these S1s, you'll find that the lawyers have dumped the laundry, the kitchen sink, and everything else into it. Tell us more about how Joe Lubin's company, Consensus, controls metamask, infuria, and other key parts of the ethereum infrastructure. What are the conflicts of interest there? All of this would be made very clear.

All significant material information about ethereum, its prospects, and its risks would need to be made public, and I can guarantee you that there are a lot of skeletons in this closet that would need to be brought out.

When it comes down to it, I don't think Ethereum is all that great. It's more of a way to get around existing Securities laws. After reading the ethereum S1, I think a lot of institutional investors will decide to sell their eth and buy another registered security instead, like Apple, Google, or Amazon. Once they're all registered as Securities, cardano, xrp, and eth will have to compete with the existing Universe of securities. I think things are going to get bad very quickly, and you won't just have to pay a fine for breaking Securities Law for the past few years. You'll also have to make these material disclosures that will hurt the credibility of the project, since these projects weren't credible to begin with.

Bitcoin, on the other hand, is an asset without a problem or a digital commodity. There is no Corporation behind it, so there is no CEO, CFO, founder, headquarters, or foundation. There's no group like Vitalik and his friends running things. If Bitcoin had to register with the CFTC in the U.S., this wouldn't change anything because everything is open source. Nothing would need to be revealed that hasn't already been revealed, and the process would be much easier. Basically, Bitcoin is already so open that none of this would need to be disclosed. For example, when crude oil registers with the CFTC so that people can trade Futures on it, it's not required to disclose who holds all the crude oil in the world. Obviously, there's crude oil everywhere, and some people hold a lot of it, and some countries produce a lot of it, but this is not part of CFTC disclosures.

Thanks for reading and be careful with security coins.