SEC - Page 22

EigenLayer has added a new security feature to its EigenDA data availability service on the Ethereum mainnet to combat Sybil and distributed denial of service attacks.

In an announcement from EigenDA, the whitelist security measure is described as using either an internet protocol address or Ethereum’s elliptic curve digital signature algorithm (ECDSA) authentication for enhanced protection and secure service access.

ECDSA authentication is a cryptographic method that verifies the identity of a user, device, or system.

It relies on public-key cryptography and employs elliptic curve cryptography for secure authentication.

With this additional security measure, EigenLayer aims to safeguard its service while ensuring its availability to all clients.

EigenDA’s free tier offers a throughput of up to 768 kilobytes per 10-minute window, significantly exceeding the requirements of the busiest rollups on Ethereum.

For instance, Base uses fewer than two blobs every 10 minutes.

Moreover, EigenDA allows partners to request increased throughput beyond the free tier, providing a flexible solution for high-demand applications.

Interested parties can collaborate with EigenDA through its partner registration page to tailor solutions for their data needs, supporting various applications and innovations requiring high-throughput capabilities.

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EigenDA can generate synthetic loads of 0.6 megabytes per second and achieve peak throughputs of up to 10 MB per second on the mainnet.

EigenLayer is also planning to implement permissionless payments for blob throughput on EigenDA by the end of 2024.

This feature will enable users to reserve bandwidth at a fixed rate to meet high throughput demands.

In May, EigenLayer completed the second phase of its EIGEN token airdrop, marking the end of its Season 1 and distributing 113 million EIGEN tokens, which is 6.7% of the allocated supply for airdrops.

Once claimed, tokens will be temporarily locked until the end of the third quarter of 2024.

However, users can still engage in staking and delegation activities with EigenDA operators through the EigenLayer web portal.

Launched on the Ethereum mainnet in April 2024, EigenLayer has already amassed over $12 billion in deposits.

The platform supports new proof-of-stake projects by leveraging a broader trust network, thus eliminating the need for separate security solutions.

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On June 19, 2024, the United States Securities and Exchange Commission (SEC) closed its investigation into whether Ether should be classified as a security.

Consensys lawyer Laura Brookover noted that crypto markets will see “no more protestations from the SEC that ETH is a security.”

However, Carol Goforth, a professor at the University of Arkansas School of Law, clarified to Cointelegraph that “all the decision means is that at this time, the SEC will not be continuing its investigation.

“This is not a final determination.”

Consensys believes the SEC’s withdrawal from its investigation of Ethereum has lifted a significant burden from the network.

The SEC retreat has alleviated negative regulatory concerns regarding ETH as a security, raising questions about how ETH’s price will react and which altcoins might benefit.

Observers anticipate Ether’s price could surge.

Since the SEC stopped its investigation, Ether’s price has remained relatively stable, following a horizontal pattern since the news of spot Ether ETF approval on May 23.

At the time of publishing, Ether is down 2%, prompting traders to wonder if ETH will surge and if the altcoin market will follow.

Conor O’Neill, community lead and partner of investment analytics company Blockcircle, stated that “the major regulatory barrier” for Ethereum has been removed, setting a significant precedent for regulators worldwide.

O’Neill believes the removal of this barrier will likely cause Ether’s price to increase significantly, barring a catastrophic world event.

The expected launch of spot Ether exchange-traded funds (ETFs) on July 2 will impact ETH’s price.

Traditional markets are expected to inject capital into the ETFs, boosting ETH demand and price.

READ MORE: Federal Judge Hints at Denying Kraken’s Motion to Dismiss SEC Case, Suggests Digital Assets May Be Securities

O’Neill explained that the ETH ETF “is highly likely to have a long-term positive impact on the price of Ethereum.”

However, he cautioned about a potential short-term pullback similar to the one seen when Bitcoin ETFs were approved.

ETF issuers cannot offer an Ether ETF with staking, as the SEC alleges that staking involves an investment contract, which could negatively impact ETH’s long-term performance.

Some have questioned whether Grayscale outflows could affect Ether’s price after ETFs launch.

However, O’Neill highlighted that Grayscale’s reduced fees for its Ether trust compared to other Ether ETF providers could mitigate this effect.

O’Neill predicted that ETH will “follow a similar trajectory to Bitcoin’s price, with a dip followed by an exponential rise.”

He noted that many market commentators did not expect Ethereum’s approval, suggesting a potentially bullish scenario for ETH.

When Bitcoin’s price surges, it often lifts the entire crypto market, including altcoins.

The SEC’s decision may benefit other altcoins previously accused of being securities.

O’Neill believes projects like Aave, Chainlink, or layer-2 chains such as Arbitrum, Optimism, or Base could benefit.

However, he noted that many of these projects offer staking capabilities and are not entirely free from SEC scrutiny.

The SEC’s approach could change with the U.S. presidential election approaching, potentially impacting its stance on digital assets and staking.

The approval of spot Ether ETFs and the withdrawal of the SEC’s investigation signal a potential shift in the SEC’s approach, marking a pivotal moment for Ethereum and the broader cryptocurrency market.

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On June 21, several asset managers, including VanEck, BlackRock, Grayscale, and Invesco Galaxy Digital, submitted revised proposals for an Ethereum exchange-traded fund (ETF) to the United States Securities and Exchange Commission (SEC).

These asset managers released updated S-1 Registration Statements after the market closed on Friday, following Fidelity’s new S-1 form submission earlier in the day.

VanEck’s filing disclosed a 0.20% management fee for its Ethereum fund, aligning it with competitors like Franklin Templeton, which charges 0.19%.

BlackRock has not yet revealed the management fee for its iShares Ethereum Trust (ETHA). Bloomberg analyst Eric Balchunas noted that VanEck’s fee adds “a touch of pressure on BlackRock to stay under the 30bps at least.”

The recent filings follow several previous amendments submitted to the SEC in recent weeks.

The approval of the S-1 forms is one of the final steps before these funds can debut on Wall Street exchanges.

Balchunas predicts the ETFs will launch in the first week of July, just before the U.S. Independence Day holiday.

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In May, the SEC approved a rule change permitting major asset managers to list and trade eight spot Ether ETFs.

This approval included firms like VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise.

Fidelity’s updated filing revealed that FMR Capital, an affiliate, seeded $4.7 million at $38 per share.

Bitwise also updated its ETF proposal with the SEC on June 19, indicating a potential $100 million investment from Pantera Capital at the ETF’s trading launch.

Additionally, Hashdex is seeking regulatory approval for a new ETF combining spot Bitcoin and Ether. This comes after Hashdex recently abandoned its plans to launch an ETF solely dedicated to Ether.

These filings reflect a growing interest in Ethereum ETFs, highlighting the competitive landscape among asset managers and the anticipation of these funds’ impact on the market once approved.

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A U.S. federal court judge has advanced a civil securities lawsuit against Ripple Labs, rejecting its bid for summary judgment.

This lawsuit claims that Ripple’s CEO violated California securities laws.

On June 20, Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California ruled that a jury will decide if Ripple CEO Brad Garlinghouse made “misleading statements” during a 2017 interview.

The judge dismissed four allegations regarding Ripple’s “failure to register XRP as a security.”

In the 2017 interview on Canada’s BNN Bloomberg, Garlinghouse stated he was “very, very long” on XRP. However, the lawsuit alleges this was misleading, as he “sold millions of XRP” throughout that year.

“We are pleased that the California court dismissed all class action claims. The one individual state law claim that survived will be dealt with at trial,” said Ripple’s chief legal officer, Stu Alderoty, in an emailed statement to Cointelegraph.

Judge Hamilton noted that Ripple argued the “misleading statement” claim should be dismissed, asserting XRP is not a security under the Howey test.

Ripple referenced a significant July 2023 ruling by Judge Analisa Torres in a lawsuit between the U.S. Securities and Exchange Commission (SEC) and Ripple.

However, Hamilton disagreed, finding that XRP could be considered a security when sold to non-institutional investors, who might expect profits from Ripple’s efforts—one of the criteria of the Howey test.

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“The court declines to find as a matter of law that a reasonable investor would have derived any expectation of profit from general cryptocurrency market trends, as opposed to Ripple’s efforts to facilitate XRP’s use in cross-border payments, among other things.

Accordingly, the [court] cannot find as a matter of law that Ripple’s conduct would not have led a reasonable investor to have an expectation of profit due to the efforts of others,” Hamilton wrote.

Ripple’s Alderoty emphasized, “The ruling from Judge Torres in the SEC case still stands and nothing here disturbs that decision.”

Many in the U.S. crypto industry celebrated Torres’ ruling as a major victory in 2023, anticipating that it would set a precedent for other crypto cases.

However, its impact has been less significant than expected.

In the SEC’s case against Terraform Labs, Judge Jed Rakoff, from the same courthouse as Torres, disagreed with the Ripple ruling, rejecting Terraform’s dismissal motion in August.

Terraform subsequently lost the case and had to pay a $4.5 billion settlement to the SEC.

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Lawyers representing Kraken and the United States Securities and Exchange Commission (SEC) argued in a federal court about whether digital assets on the Kraken exchange could be considered securities.

At a June 20 hearing in the U.S. District Court for the Northern District of California, Kraken’s lawyer Matthew Solomon and SEC counsel Peter Moores presented their cases before Judge William Orrick.

The hearing focused on a motion to dismiss filed by Kraken in February.

Judge Orrick indicated he was “inclined to deny” the motion, suggesting it was “plausible” that digital assets were offered and sold as investment contracts on Kraken.

Solomon argued that Kraken’s case differed significantly from other litigated cases, such as those involving the SEC and Terraform Labs and Telegram.

He referenced Judge Analisa Torres’ decision in the SEC’s case against Ripple Labs, where the judge ruled the token was a security when sold to institutional investors, but noted the closest comparable case to Kraken’s was Coinbase’s.

The SEC’s argument hinged on treating Kraken as an “ecosystem” where tokens are sold as investment contracts, making them securities under the Howey test. Kraken’s legal team disputed these theories.

“I think conjuring up the notion of an ecosystem just for crypto — that’s not the way rules oughta be applied,” said Solomon.

“Crypto deserves no better than anybody else, but they oughta have the rules applied equally to them as they’ve applied to everyone else.”

Solomon added, “The SEC doesn’t just have to show that there is a security under Howey, they’ve gotta show that that security was brokered, traded, or cleared on Kraken.

That is impossible the way they’ve constructed their argument.”

Judge Orrick did not rule on the motion to dismiss during the hearing but indicated he was still inclined to deny it.

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He suggested that a year should be sufficient for discovery if the case proceeds.

The SEC filed its enforcement action against Kraken in November 2023. Prior to this, Kraken settled with the SEC in February 2023, agreeing to pay $30 million and cease offering staking services or programs to U.S. clients.

Although Ether was not specifically mentioned in the SEC v. Kraken case, it has been central in some crypto firms’ legal battles with the SEC.

In April, Consensys filed a lawsuit against the SEC after receiving a Wells notice regarding potential enforcement action based on Ether.

However, the SEC concluded its investigation on June 19, suggesting it considered Ether a commodity.

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