
If Ethereum Isn’t a Security Then Nothing Is - chollida1
https://mechanicalmarkets.wordpress.com/2018/03/13/ether-is-a-security/
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bmcusick
Coin Center isn't an unbiased source, but they do have the advantage of
actually being lawyers: [https://coincenter.org/entry/no-ether-is-not-a-
security](https://coincenter.org/entry/no-ether-is-not-a-security)

Full disclosure: I am also a lawyer, and I work in markets trading at a bank.
That's not an endorsement of Coin Center's conclusions, but it's my informed
opinion their arguments are sounder than the idle speculation of the author.

If there's anything that Ether is similar to, it's a currencies (my area),
collectibles, or commodities (adjacent to my area). There's no underlying
business that's being invested in or paying dividends to you. It's 100% a
speculation on appreciation.

I'll give you an example. Say Vitalik owned a oil exploration company, and he
also owned oil rights to a big patch of oil in Texas somewhere. Instead of
selling shares in his company to raise money, he pre-sells the oil. "You give
me money for the oil, and I'll go dig it up for you."

You don't own shares in his company. You own oil. Oil isn't a security.

~~~
will_brown
I respectfully disagree. As a fellow lawyer, I think it’s the standard legal
answer...maybe.

Oil is a commodity and as described by you that transaction wouldn’t be a
security. However, the way you frame it:

>There's no underlying business that's being invested in or paying dividends
to you.

>You don't own shares in his company.

You make it sound that only equity/shares are securities, which isn’t the
standard.

>It's 100% a speculation on appreciation.

While there is massive speculation, that’s not the standard either, and I
don’t think your factual conclusion is accurate either. The investors are
relying on the efforts of others for their profits. The article you link
concludes Ether isn’t a security because the investors aren’t relying on the
issuer/promoter rather 3rd party developers. But case law doesn’t limit the
reliance to the promoter it specifically uses the word “others”, but even so,
I think it’s easily argued investors are relying on the foundation to bring
3rd party developers to the table.

At the end of the day...the SEC could have done a Howey analysis on Ether
itself, which in my opinion would have been much more interesting and
informative than the SEC retroactively doing an analysis on the DAO.

~~~
bmcusick
> The investors are relying on the efforts of others for their profits.

Are investors in gold relying on the efforts of others for their profits?
After all, there are people out there making gold exchanges, developing gold
mines, marketing gold jewelry, minting coins and bars for vaults, etc. etc.
There's your efforts of third parties which drives up value of gold.

Of course the answer is "maybe" until the law is written or the case decided,
but let's not lose sight of the fact that the law already has categories that
are a closer fit.

Who's the third party in a decentralized ecosystem? Everyone who's ever
contributed a line of code? Everyone who has developed a DAPP that feeds the
demand side of the market?

Where's the common enterprise that's being invested in?

~~~
will_brown
Well as lawyers we know why gold isn’t a security according to case law, and
that logic definitely doesn’t apply to Ethereum/Ether.

>Where's the common enterprise that's being invested in?

The DAO was a decentralized ecosystem and yet the SEC issued an opinion. So
what in your mind distinguishes Ether from the DAO tokens and makes Ether
deserve to be treated like gold or another commodity like oil?

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jamespitts
This is thorough and useful research, thanks for posting it here. Too often
people weigh in without reviewing the relevant material.

I have X-Posted it to
[https://www.reddit.com/r/ethlaw/comments/8hpjbx/if_eth_isnt_...](https://www.reddit.com/r/ethlaw/comments/8hpjbx/if_eth_isnt_a_security_then_nothing_is_indepth/)
for feedback.

(I started this subreddit last year to encourage those who have a legal
education or experience to comment on issues emerging in the community.)

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vasilipupkin
i think this post is idle speculation, as the author himself admits:

"I’m not a lawyer, and not the right person to be making this argument". Case
closed.

~~~
LyndsySimon
This appears to be an obvious appeal to authority. An individual's
qualifications have no bearing on the soundness of their arguments.

Further, the term "lawyer" doesn't mean that someone is entitled to practice
law; merely someone educated in the law. A lawyer is typically (but not
always!) someone who has attended a law school. An attorney is someone who has
passed the bar exam and is therefore entitled to practice law in that
jurisdiction.

All attorneys are lawyers, but not all lawyers are attorneys.

Note that a lay person who has devoted the time necessary to know and
understand the law can be termed a "lawyer". I would argue, based on the
quality of the article the author is in fact a lawyer despite their assertion
that they are not.

~~~
exolymph
This is not how people use the terms "lawyer" and "attorney" in practice — at
least in for a lay audience, they're equivalent.

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45h34jh53k4j
Title of article is misspelled. Its 'Ethereum'.

