Ethereum plunges after SEC chief says crypto can be security

by Arthur · September 19, 2022

SEC Chairman Gary Gensler testifies during a hearing before the Senate Banking, Housing and Urban Affairs Committee in Washington, DC, Thursday, September 15, 2022.

Ethereum, the second largest cryptocurrency in the world, continued to plunge in price over the weekend following the network’s highly publicized technical change known as ‘the merger‘ last Thursday as well as comments from the head of the Securities and Exchange Commission that ether may have to be treated as a security. Ethereum is currently trading at about $1,290, down over 11% from 24 hours ago, while bitcoin, the most popular crypto in the world, is also down 8% to just $18,420.

Ethereum completed a network upgrade known as ‘the Merge’ last Thursday, moving the cryptocurrency from a proof-of-work system to a proof-of-stake system. Proof-of-work was incredibly energy-intensive, requiring so-called “miners” to make their computers play a guessing game to confirm transactions. Proof-of-stake allows people who already have ether to “stake” their cryptocurrency to verify transactions in exchange for long-term interest earned in the same way a savings account can earn interest.

And therein lies the problem. Moving to a “proof-of-stake” system means that people who invest in ethereum and then “stake” on ether are treating their investment as something closer to a security than a currency – especially since very few people actually use ether to pay for the things. And the strike has drawn the attention of people like SEC Chairman Gary Gensler who made post-merger comments that are making crypto investors nervous.

“From the coin’s perspective … it’s another indication that under the Howey test, the investing public expects profits based on the efforts of others,” Gensler said Thursday, according to a report from The Wall Street Journal.

As the Journal notes, Cardano and Solana are already two popular coins that operate using proof-of-stake. Cardano is down 80% from a year ago, while Solana is down 78% from the previous year.

Bitcoin is currently trading at about $18,420, down 8% in the last 24 hours and well below the all-time high of $68,000 on November 9, 2021. The fall and winter of 2021 was also when you started watching all those TV- one commercial from celebrities such as Matt Damon, Larry David and LeBron James. Funny how they told you to buy at the top just as smart money exited their positions. The Ether Foundation, as just one example, sold a huge amount of ethereum rights at the top in November. Either they are extremely lucky or the whole thing is a Ponzi scheme.

Click through to see how the top cryptocurrencies in the world are faring on Monday morning. Everything is down, not only on the day, but also for the last week. In the last 24 hours, BNB is down around 7%, XRP is down 10.6%, Cardano is down 10.7%, Solana is down 8.6% and Dogecoin is down 8.5%. Rounding out the top ten cryptocurrencies, Polkadot is down 12%, Shiba Inu is down 1.4% and Lido Staked Ether is down 10.7%.