Gary Gensler links crypto with cash in viral 2018 video – Crypto Twitter reacts
The crypto community is calling out the hypocrisy of Gary Gensler, the head of the US Securities and Exchange Commission, after a 2018 video surfaced of him saying that cryptocurrencies are on par with commodities or cash and are not securities.
The video came from a Fall 2018 “Blockchain and Money” class taught by Gensler, a former professor at the Massachusetts Institute of Technology (MIT) before becoming head of the Securities and Exchange Commission (SEC).
Regarding initial coin offerings (ICOs), Gensler said that “three-quarters of the market are not ICOs or not what would be called securities” and named the US, Canadian and Taiwanese markets as the “three jurisdictions that follow something similar to Howey- the test.”
“Three quarters of the market is non-securities, it’s just a commodity, cash, crypto,” Gensler said.
While Gensler briefly acknowledged that ICOs could 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 comments.
Coinbase CEO Brian Armstrong only commented “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 a Twitter post on April 25 to his 658,900 followers.
Farokh Sarmad, the founder of the Web3 podcast Rug Radio called Gensler “disgusting” in a tweet to his 346,200 followers, while a systems engineer, called “JD” called on the SEC chairman to provide an explanation behind the change in opinion.
Not everyone saw eye to eye.
Related: Gary Gensler refuses to answer whether ETH is a security: SEC hearing
U.S. Attorney Preston Byrne explained that professors and law enforcement officers work in “different capacities” and that Gensler should not be held to the same views he held then.
Another US attorney, Jonathan Schmalfeld, who specializes in blockchain technology, challenged Byrne’s opinion, saying that Gensler’s interpretation of the Howey test should not be changed by virtue of his capacity. The answer took a second explanation from Byrne:
“I mean when I talk to clients about this, there are three answers, what I think the law is, how I think the enforcers will interpret it, and what the law should be. Right now, he’s limited to giving just one of those answers in power of his position.”
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