The crypto community is exposing the alleged hypocrisy of Gary Gensler, the head of the US Securities and Exchange Commission, after the release of his 2018 video declaring that cryptocurrencies are equivalent to cryptocurrencies commodity or money and not a security.
The video is from the course “Blockchain and Money” from the fall 2018 semester taught by Gensler, a former professor at the Massachusetts Institute of Technology (MIT) before becoming the chairman of the Securities and Exchange Commission (SEC). On initial coin offerings (ICOs), Gensler said that “three-quarters of the market is not an ICO or not what you would call a security,” pointing to the US, Canadian and Taiwanese markets as “potential three follow the same thing” and the Howey test.
“Three quarters of the market is not a security, it’s just real estate, money, crypto,” Gensler said later.
Although Gensler briefly acknowledged that ICOs could trigger security debates, he concluded that “three-quarters of the market is not particularly important legally.”
Gensler’s comments surprised many members of the crypto community. Coinbase CEO Brian Armstrong said a simple “Wow” in response to an April 26 Twitter post shared by cryptocurrency analyst “zk-SHARK.”
Erik Voorhees, founder of crypto-trading platform ShapeShift, asked: “When is someone arrested for fraud?” on April 25 tweet to his 658,900 followers.
Farokh Sarmad, the founder of the Web3 Rug Radio podcast, called Gensler “disgusting” in a tweet to his 346,200 followers, while the system engineer, nicknamed “JD”, called the SEC Chairman to He gave an explanation for the change of mind. However, not everyone agreed.
US Attorney Preston Byrne explained that professors and law enforcement officers work in “different capacities” and that Gensler should not be held to the same opinion he had at the time. Another US attorney, blockchain technology expert Jonathan Schmalfeld, disputed Byrne’s opinion, saying that Gensler’s interpretation of Howey’s test should not be changed because of his authority. That response prompted a second comment from Byrne.