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SEC Seeks To Take Authority Over All Ethereum Transactions In SPRK Suit (Opinion)

On Monday, the Securities and Exchange Commission filed a regulatory lawsuit against Ian Ballina. The computer engineer and data scientist has appeared prominently on investment programs such as CNBC, Forbes, Business Insider, and Entrepreneur Magazine.

SEC hammers Sparkster Coin for improper disclosure

That The SEC filed the civil complaint in Austin, Texas, on the initial coin offering for the Ethereum-based token Sparkster. The commission claims Improper Consumer Disclosures Regarding Ballina’s ICO 2018 Compensation:

“[Ballina] claimed he could help people “make millions with initial coin offerings…” [Further he] failed to disclose the compensation it received from the issuer while publicly promoting the tokens. He also failed to file a registration statement with the SEC for the tokens he resold through an investment pool he organized.”

There is no price listed on the page for SPRK on the popular crypto price tracker CoinMarketCap. It goes on to say: “Market data is not tracked. This project is marked as “Untracked Listing”.

This means the Ethereum token does not meet all CMC guidelines for tracked entries. These include leveraging cryptography and decentralized consensus mechanisms to run peer-to-peer (P2P) digital currency ledgers. CMC also only tracks cryptos with a working website and block explorer. Additionally, coins must be “publicly traded and actively traded on at least one (1) exchange (of physical volume)”.

Sparkster CEO Sajjad Daya reached an agreement to pay out $35 million to scammed investors. That agreement came on Tuesdayjust a day after the SEC filed its complaint.

Takeover sovereignty over all Ethereum transactions?

With the dust settling on the civil suit, Wednesday’s industry review of the lawsuit raises an interesting possibility. The SEC appears to be preparing to take over all Ethereum tokens and transactions under its jurisdiction.

In the 69th section of the filing, the commission put forward a novel legal theory on how to regulate cryptos:

“[The investors] sent their ETH contributions to Balina’s pool. At this point, their ETH contributions were validated by a network of nodes on the Ethereum Blockchain, which are more densely clustered in the United States than in any other country. As a result, these transactions took place in the United States. [bold emphasis added]”

While Sparkster is headquartered in the Cayman Islands, the SEC’s theory is that the multitude of Ethereum nodes in the US means all Ethereum tokens and transactions take place in the United States. This is another point in an SEC sweep to take jurisdiction over Ethereum. That includes a recent warning from the SEC chairman that the merge to proof-of-stake tokens Ethereum a security.

Source: Crypto News Deutsch

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