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Source: Сointеlеgrаph

The Securities and Exchange Commission (SEC) has made an unprecedented claim that Ethereum transactions are taking place in the United States because ETH nodes are “clustered more densely” in the United States than in any other country.

The SEC’s argument is contained in a Sept. 19 lawsuit against cryptocurrency researcher and YouTuber Jan Balina alleging, among many other complaints, that Balina ran an unregistered Sparkster token offering (SPRK) when he formed an investment pool in Telegram in 2018.

The SEC claims that at the time that US investors participated in Balina’s investment pool, ETH deposits were verified by a network of nodes on the Ethereum blockchain, “which are clustered more densely in the United States than in any other country.”

The SEC argued that “these transactions took place in the United States” as a result.

At this stage, it is unclear whether such a claim will stand up in court and whether there is any legal precedent at stake. However, according to Ethernodes, 42.56% of the 7,807 Ethereum nodes are currently located in the US.

Speaking to , Dr. Aaron Lane, an Australian lawyer and senior fellow at the RMIT Blockchain Innovation Hub, said the distribution of Ethereum nodes is largely irrelevant to the case at hand, explaining:

“The fact that we have a US plaintiff, a US defendant, and transactions originating in the US is the most important thing here. It doesn’t matter if the payment was made via Ethereum, Mastercard or any payment network, for that matter.”

Lane said that while the SEC’s lawsuit was interesting, he added that even if Balina’s lawyers didn’t challenge the jurisdiction issue, it wouldn’t have any impact on future cases yet:

“Here, the defense can accept jurisdiction, and if they do, then it will not be a problem, and if it is not a contentious issue, then the court will not say anything about it. Any concerns about judicial precedent at this stage are premature.”

Related: 3 cloud providers account for over two-thirds of Ethereum nodes: data

The SEC has been criticized in the past for its approach to regulating cryptocurrencies, which some have referred to as “enforcement regulation.”

SEC Chairman Gary Gensler recently hinted that Ethereum-based staking could also trigger U.S. securities laws shortly after Ethereum moved to proof-of-stake on Sept. 15.

Responding to the lawsuit, Balina stated in a 19-part Twitter thread that the allegations were “unfounded” and that he “refused the settlement agreement so that they [SEC] must prove themselves.”

Balina did not comment on the SEC’s statement that the US should be given jurisdiction over Ethereum-based transactions due to the large number of nodes located in the US.

Balina’s allegations come from Sparkster and its CEO, Sajjad Daya, recently settling with the SEC on Sept. 19, agreeing to pay $35 million to “affected investors” after the 2018 ICO.

Source: Сointеlеgrаph

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