Ethereum And Ripple Commit Securities Fraud: Michael Saylor

Bitcoin bull Michael Saylor famously doesn’t care much for altcoins, including Ripple (XRP) and Ethereum (ETH). In a recent podcast appearance, Saylor spoke about classifying these cryptocurrencies as securities.

In reference to the legal battle between Ripple Labs and the US Securities and Exchange Commission (SEC), Saylor stated that she believes Ripple is an unregistered security.

“It’s pretty obvious,” said MicroStrategy’s CEO, continuing, “It’s a company. The company owns a lot of it. They sell to the general public but have never taken the company public. There are no disclosures.

This is why Ethereum (ETH) and Ripple (XRP) are securities

He shared the same opinion about the second largest cryptocurrency by market cap, Ethereum. According to Saylor, ETH is an unregistered security because “it’s controlled by a few people – the Ethereum Foundation and ConsenSys… Just like FTT, just like Solana.”

MicroStrategy’s CEO continued to elaborate, establishing that virtually all altcoins are securities and should be subject to SEC oversight:

I think the best thing for the world would be if the SEC shut everything down. It’s all unethical.

While Bitcoin is an ethical commodity, all altcoins are just stock tokens issued by a company to avoid an IPO. “And they are committing securities fraud,” Saylor said.

“Especially Ethereum.” The Bitcoin bull pointed out that Ethereum has $20 billion worth of ETH tokens locked in an escrow agreement at the moment, and it is currently unclear when withdrawals will be possible.

As Bitcoinist reported, withdrawals from the ETH 2.0 deposit contract are still not possible after the timeline has been pushed back several times. Redemptions are currently scheduled for the Shanghai update, which will be the next major update after the merger. The fork is currently slated for March 2023.

In reference to this, Saylor criticized the fact that there is a small group of people who decide if and when deposit agreement withdrawals are allowed.

Now, isn’t that the definition of an investment contract? If a bank took $20 billion of your assets, froze the window and said ‘You can’t get your money back, ever, maybe in the year 2024. We’re not sure.[…] We can give you interest on that.’ That is the definition of security.

The CEO of MicroStrategy generalized that you cannot trust a few engineers, a company or a CEO if a cryptocurrency is to be a commodity. He concluded:

It is an investment of money in a common enterprise, relying on the efforts of others in the expectation of profits. If a person can make a decision, it’s not a commodity.

Ripple is seeking to challenge the application of that same definition to XRP in its litigation with the SEC. The fair warning notice, as well as the joint venture argument, are among the most promising arguments for Ripple to win.

“They are committing securities fraud… especially Ethereum.”@saylor gives his opinion on Ethereum and Rippe pic.twitter.com/STsuLX5FQh

— PBD Podcast (@PBDsPodcast) December 6, 2022

CFTC and SEC suggest tight regulation

Notably, Saylor recently shared a Fortune report on the Commodity Futures Trading Commission’s assessment. At an event, chairman Rostin Behnam stated that the only cryptocurrency that should be considered a commodity is Bitcoin.

In doing so, the Behnam-led agency completely backtracked from previous valuations in which the agency referred to ETH as a commodity. Just a month earlier, Behnam gave a speech to the Rutgers Center for Corporate Law and Governance and took the opposite position.

Michael Saylor’s opinion is also consistent with recent comments by Gary Gensler. The SEC chairman suggested that Ethereum’s proof of stake could lead to the token being considered a security.

At press time, the price of ETH is down 3.5%, dropping to $1,226.