Cardano’s Founder says that the SEC Will Target EOS
Cardano’s Founder and the head of IOHK Charles Hoskinson warned that the Securities and Exchange Commission (SEC) would crack down on EOS.
EOS conducted the largest ICO in history worth over $4 Billion. There have been many allegations on EOS not only on the aspect of decentralization but also on the token being a security.
Charles speaking at the Edinburgh University’s Blockchain Technology Laboratory on December 11th expressed his opinions on Dan Larimer who is the CTO of Block.ine and the entire team behind it.
According to Cryptobriefing, Charles said that the SEC will likely bring punitive measures against Block.one. The IOHK head goes on to explain that the EOS ICO had fundamental flaws making it an easy target for the SEC who are obligated to take action if it caused harm to the retail investors. he also called the crowd sale “egregious”.
“I can’t imagine how they’re [Block.One] not going to have some sort of issue with the SEC.”
Problems with EOS
The SEC has stated that a token will not be considered a security if it is “decentralized enough”. But the specific details on the parameters considered by the SEC to measure decentralization is unknown at this point.
Centralization: The focus of EOS has always been to create a scalable Blockchain which is usable by enterprises for applications. Unlike other consensus algorithms like Proof of work, EOS uses a unique mechanism where 21 Block producers validate the transactions at any given time.
The SEC has stated Cryptocurrencies like Bitcoin are not securities as they are decentralized, but it is unknown how they will measure the decentralization in EOS which appears to be more centralized than the Proof of Work chains.
Censorship and BP Mafia: EOS Block producers were able to freeze over 27 accounts and censor transactions indefinitely without mentioning any reason for doing so. The bigger question is if the Block producers are able to dictate the immutability and censorship on the Blockchain, then will that lead to cartels being formed who might act against the interest of the users.
The Crypto Publication Trust nodes reported on a leaked spreadsheet by a Huobi employee titled “Huobi Pool Node Account Data 20180911”. The document revealed that Huobi was colluding with other Block producers for mutual voting. This would be illegal according to the US law as an exchange cannot cooperate with a publicly traded company.
Investors have lost more money in Cardano which is down 98% from the high compared to EOS which is down 92%. So the basis here cannot be who have lost more money but has to revolve around how these Crypto companies have broken the US Securities laws.
The SEC has already cracked down on two ICO’s for breaking securities laws, it might eventually go behind the bigger players in the space. As there is no regulatory clarity around Crypto assets, one can only speculate on how these regulatory bodies will act going forward.
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