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Here’s why the US SEC is in trouble after the approval of the Ether ETF, according to a cryptocurrency lawyer
Cryptocurrency lawyer James Murphy, known as MetaLawMan, believes the US Securities and Exchange Commission (SEC) has gotten into trouble following the approval of spot Exchange Traded Funds (ETFs) for the Ethereum network.
In an X sendMurphy said the SEC is in “deep trouble” with its lawsuits against some cryptocurrency companies because the agency’s approval of Ethereum ETFs has finalized the debate over ether (ETH) as a commodity.
The SEC is in big trouble
On May 23rd the SEC officially go ahead the launch of eight Ethereum ETFs from asset managers, including Fidelity, BlackRock, Ark Invest/21Shares, Franklin Templeton, VanEck and Invesco/Galaxy Digital.
A week ago, crypto community members and market experts estimated the probability of approval at 25% due to the SEC’s anti-crypto stance. However, the market saw a surprising turn of events this week, with analysts raising the odds to 75%.
Although the SEC has persisted in its anti-crypto stance over the years, the agency has launched legal battles against several American digital asset entities, accusing them of offering unregistered securities such as ETH, Solana (SOL), Cardano (ADA), Ripple (XRP), Polygon (MATIC) and many other crypto tokens.
Murphy noted in his tweet that the security agency repeatedly argued during a hearing in its lawsuit against America’s largest cryptocurrency exchange, Coinbase, that crypto tokens operating within an ecosystem were classified as securities. Assets such as ETH, SOL, ADA and XRP fall into this category.
The SEC faces challenges in cryptocurrency-related cases
Additionally, the cryptocurrency lawyer revealed that US District Judge Katherine Polk Failla, overseeing the SEC case against Coinbase, applied the agency’s ecosystem argument in his ruling. The order stated that customers who purchase tokens on Coinbase are not just acquiring the assets in their worthless form, but are purchasing digital ecosystems, the growth of which is tied to the value of the tokens.
Murphy believes the SEC would have difficulty explaining to US courts how ETH is a commodity, but similar ecosystem tokens like SOL and ADA are not.
With Coinbase due to file a brief response to his petition to soon certify an interlocutory appeal in the case, Murphy said it would not be surprising if the exchange also filed a request for reconsideration or its motion to dismiss the SEC case on the premise that the agency now recognizes ETH as a commodity. Worse, other cryptocurrency companies with similar cases pending with the security agency may be using the same approach.