The crypto community is calling out the alleged hypocrisy of Gary Gensler, the head of the United States securities regulator, after a 2018 video emerged of him stating that cryptocurrencies are on par with commodities or cash and are not securities.
The video came from a “Blockchain and Money” class in the Fall Semester of 2018 taught by Gensler, a former professor at the Massachusetts Institute of Technology (MIT) before he became chair of the Securities and Exchange Commission (SEC).
On the topic of initial coin offerings (ICOs), Gensler said that “three-quarters of the market are not ICOs or not what would be called securities,” naming the U.S., Canadian and Taiwanese markets as the “three jurisdictions that follow something similar to the Howey test.”
“Three-quarters of the market is non-securities, it’s just a commodity, cash,crypto,” Gensler then said.
While Gensler briefly acknowledged that ICOs may spark a securities debate, he concluded that “three-quarters of the market is not particularly relevant as a legal matter.”
Several members of the crypto community were stunned by Gensler’s remarks.
Coinbase CEO Brian Armstrong commented a mere “Wow” in response to an April 26 Twitter post shared by cryptocurrency researcher “zk-SHARK.”
Erik Voorhees, the founder of crypto trading platform ShapeShift, asked, “When does someone get arrested for fraud?” in an April 25 tweet to his 658,900 followers.
Farokh Sarmad, the founder of Web3 podcast Rug Radio called Gensler “disgusting” in a tweet to his 346,200 followers, while a systems engineer, named “JD” called on the SEC Chair to provide an explanation behind the change in opinion.
Not everyone saw eye to eye though.
Related: Gary Gensler refuses to answer if ETH is a security: SEC hearing
U.S. lawyer Preston Byrne explained that professors and law enforcers work in “different capacities” and that Gensler shouldn’t be held to the same views he had back then.
Another U.S. lawyer, blockchain technology specialist Jonathan Schmalfeld, challenged Byrne’s opinion, stating that Gensler’s interpretation of the Howey test shouldn’t change by virtue of his capacity. The response prompted a second explanation from Byrne:
“I mean when I talk with clients about this stuff there are three answers, what I think the law is, how I think enforcers will interpret it, and what the law ought to be. Right now he’s limited to giving only one of those answers by virtue of his position.”
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