Steven Nerayoff, an early Ethereum advisor, leveled allegations at SEC Chair Gary Gensler on Tuesday, hinting at Gensler’s undisclosed deep ties with Ethereum and potential influence by the Chinese Communist Party (CCP).

Steven Nerayoff Ethereum ETFs Stir the Pot

Nerayoff alleged that the growing speculation surrounding an Ethereum ETF suggests a potential deeper involvement of the SEC with Ethereum than publicly acknowledged.

He specifically accused Gensler of indirectly endorsing the designation of ETH as a security by approving Prometheum in 2023 as the first and only special-purpose crypto broker-dealer licensed under SEC regulations—effectively backing an ETF under the radar.

“Specifically, he accuses Gensler of indirectly approving Prometheum Inc. to designate ETH as a security, effectively endorsing an ETF covertly. “https://t.co/CAP71sVm7N

— Eli (@elighvk) February 13, 2024

Prominent players like Fidelity, WisdomTree, and BlackRock have filed many applications for spot Ethereum ETF approval.

Despite declaring some popular cryptocurrencies as securities, the SEC hasn’t clarified Ethereum’s legal classification, however.

In the wake of the FTX collapse, Gensler has doubled the SEC efforts on crypto regulations. He also emphasized the sufficiency of current crypto regulations and stated that legal actions have been taken against exchanges for non-compliance.

Although it has yet to initiate trading or generate revenue, Prometheum co-CEO Aaron Kaplan announced plans to begin custodying institutional clients’ assets in the upcoming quarter.

Former Ethereum Advisor Raises Alarms Over SEC’s Ethereum Decisions

Prometheum’s assertion that it had discovered a compliant avenue for crypto trading was immediately criticized by legal experts within the cryptocurrency industry.

They contended that even if the SEC and the Financial Industry Regulatory Authority (FINRA) endorsed Prometheum’s framework, it would lack tradable assets.

Skeptics argue that while the SEC oversees securities, cryptocurrencies such as Solana and Ethereum resemble commodities like oil or gold. As a result, they fall outside the legal definition of security and are thus ineligible for registration.

In mid-2023, Prometheum also gained considerable attention by securing approval from FINRA, allowing it to function as a special-purpose broker-dealer for digital asset securities.

The suspicion is that although the SEC introduced this designation in 2021, it’s odd that it’s the only company that has obtained a license.

This seems to be why Steven Nerayoff has raised public concerns, alleging compromised integrity within the SEC and related entities.

He attributed this to the alleged influence of the Chinese Communist Party (CCP) over the Ethereum blockchain.

Additionally, reports from TruthLabs indicate the CCP may control over 66.6% of the ETH supply.

Nerayoff further highlighted the strategic influence wielded by the CCP through entities like Wanxiang, which has a major involvement with Prometheum.

These claims would substantially impact Ethereum’s decentralization, security, and regulatory status if true.

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