The cryptocurrency community accused Gary Gensler, the head of US securities regulators, of what he called hypocrisy after he released a video in 2018 that said cryptocurrencies were on par with commodities or cash, rather than securities.
The video is from Gensler's Fall 2018 "Blockchain and Currency" class, a former professor at the Massachusetts Institute of Technology (MIT) and before becoming chairman of the US Securities and Exchange Commission (SEC).
Regarding initial coin offerings (ICOs), Gensler said that "three-quarters of the market is not ICOs, or what they call securities," and referred to the US, Canadian, and Taiwanese markets as "three jurisdictions that follow similar rules" to Howey test. " "Three-quarters of the market is non-securities, it's just a commodity, cash, cryptocurrency," Gensler then said. While Gensler briefly acknowledged that ICOs could spark a securities debate, he concluded that "three-quarters of The market is not particularly relevant on legal issues."
Several members of the crypto community were shocked by Gensler's remarks. Coinbase CEO Brian Armstrong commented “wow” on an April 26 Twitter post shared by cryptocurrency researcher “zk-SHARK.” Erik Voorhees, founder of crypto trading platform ShapeShift, asked, "W does someone get arrested for fraud?" in a tweet to his 658,900 followers on April 25.
Farokh Sarmad, founder of the Web3 podcast Rug Radio, called Gensler "disgusting" in a tweet to his 346,200 followers, while a systems engineer known only as "JD" called on the SEC chairman to explain why the shift in opinion explain why. US Attorney Preston Byrne explained that professors and law enforcement officers work in "different capacities," and that Gensler should not have stood by his views at the time. Another US attorney, Jonathan Schmalfeld, an expert on blockchain technology, questioned Byrne's ar interpretation of the Howey test should not be changed by its capabilities. That response prompted Byrne to offer a second explanation: "I mean, when I talk to clients about these things, there are three answers, what do I think the law is,how do I think enforcers will interpret it, and what the law should be. Now, because of his position, he can only Give one of the answers."
