Technology

Ethereum co-founder says ‘clear heads will prevail’ in the SEC’s legal battles with crypto firms

Joseph Lubin, co-founder of Ethereum and CEO of blockchain firm ConsenSys.
Riccardo Savi | Getty Images for Concordia Summit

The co-founder of Ethereum, Joseph Lubin, said “clear heads will prevail” as the U.S. Securities and Exchange Commission continues to dispute with crypto firms in court over whether crypto tokens are considered securities.

“I anticipate that, with previous technologies like the internet, the web and cryptography, clear heads will prevail,” Lubin told CNBC’s “Capital Connection” on Thursday.

“America will see that decentralized protocols, blockchain, cryptocurrency are aligned with the philosophies of the U.S. And I think much of the rest of the world will follow suit,” said Lubin, who is also the CEO of blockchain technology company ConsenSys.

Crypto firms such as Binance, Coinbase and Ripple are fighting lawsuits with the SEC, which has accused them of law violations.

The SEC sued Ripple and its co-founders in 2020 of violating securities laws by selling its native cryptocurrency XRP without first registering it with the SEC. Meanwhile, the SEC accused Coinbase of operating an unregistered exchange and broker in June. In the same month, Binance was charged for several securities law violations.

“The vast majority of crypto tokens are securities,” the SEC chair Gary Gensler declared in his written testimony to the House Financial Services Committee in April, adding that crypto tokens have to be registered with the SEC in this case.

Gensler “indicated that he feels that many tokens are securities, although they really need to be demonstrated to be that. He can’t just make that pronouncement,” Lubin said.

In March, Lubin told CNBC that ether should instead be viewed as more of a commodity like oil, instead of as a commodity. “People buy barrels of oil with the expectation of profit,” he said at that time.

“I stand by my conviction that ether is a commodity,” Lubin told CNBC’s Dan Murphy on Thursday.

Crypto leaders have hit back at the U.S. for a lack of clarity around crypto regulations and have threatened to leave the country if the SEC continues to crack down on crypto firms.

Lubin said that “a lot of countries take some of their lead from the U.S.”

“The U.S. has a lot of influence on the world through financial intermediaries and other intermediaries, and decentralized protocol technology is about right sizing and eliminating intermediaries in many ways. The U.S. is also all about free markets, capitalism, free speech,” Lubin said.

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