For years, the Securities and Exchange Commission has been cracking down on the crypto sector writ large, but in the last few months, the agency appears to have trained its sights on Ethereum, in particular. Some of the biggest names in decentralized finance are now fighting back.
In a 40-page filing on Tuesday, Uniswap Labs — which builds decentralized finance infrastructure including a popular DeFi crypto exchange that enables users to custody their own coins — details to the SEC all the reasons why the agency shouldn’t pursue legal action against them. It comes a few weeks after the commission issued Uniswap a Wells notice, warning the company that it identified potential violations of U.S. securities law.
“The SEC’s entirecase rests on the false assumption that all tokens are securities. Tokens are in fact, simply a file format for value,” said Uniswap’s chief legal officer Marvin Ammori.
“The SEC has to essentially unilaterally change the definitions of exchange, broker, and investment contract in order to try to capture what we do,“ continued Ammori.
A Wells notice is typically one of the final steps before the SEC formally issues charges. It generally lays out the framework of the regulatory argument and offers the potentially accused an opportunity to rebut the SEC’s claims.
So far this year, the federal regulator has sent Wells notices, filed lawsuits, or reached settlements with a host of crypto firms, and the agency’s legal challenges are increasingly focused on ethereum and players working in decentralized finance, including ShapeShift, TradeStation, Uniswap and Consensys. It also comes as the agency is reportedly investigating the Ethereum Foundation.
CNBC reached out to the SEC about the recent batch of Wells notices sent out to crypto firms, and an agency spokesperson declined to comment.
In April, Consensys tried to preempt the SEC’s action with its own lawsuit, alleging regulatory overreach on the part of the regulator. The 10-year-old crypto firm said its suit followed three subpoenas issued last year, plus a Wells notice from the SEC that claimed the company was violating federal securities laws.
“This action is about the almost certainty that we hold that the SEC is trying to slow or kill ethereum, decentralization, disintermediation, and disintermediated technology in the U.S. and probably wouldn’t stop there with its long arm,” said long-time ethereum veteran Joseph Lubin, who went from co-founding the blockchain to launching and running Consensys.
“It might influence other nation states to do similarly draconian things,” continued Lubin.
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Security vs. commodity
The recent spate of actions targeting major names working in the Ethereum ecosystem come ahead of a long-awaited decision on whether the regulator will approve or deny applications to launch spot ether exchange-traded funds.
To date, the agency’s stance on ether’s classification as either a commodity or a security remains uncertain.
“We think big banks like the way things are organized. We think certain factions of the U.S. government like the way they operate,” said Lubin. “Without explicitly stating their intentions, without public discussion and clear rule-making, the SEC seems to have decided to reclassify ether as a security without being able to utter that that’s what they’re doing.”
The industry argues if ether — the native token of the Ethereum blockchain — gets classified as a security, it could throw the future of the Ethereum network and many adjacent crypto firms into question. Exchanges, both centralized and decentralized, would be forced to choose between registering with the SEC, or delisting ether altogether.
“If the SEC, in fact, does take the position that Ethereum is a security, pretty much everyone in this business that is using or providing services of the Ethereum blockchain, they’re going to be on notice that they might need to be registered,” said digital assets attorney Christopher Gerold, who previously served as the chief of the New Jersey Bureau of Securities.
“Whatever protections they thought they had before are no longer going to be there, and we’re going to see a shift in the industry,” continued Gerold.
The head of litigation and investigations at Consensys told CNBC that they’ve been alarmed that the SEC has been targeting developers.
“They asked for a list of the names of any Consensys developers who contributed any coding to the merge,” said Laura Brookover.
The so-called merge was a years-in-the-making systemwide upgrade to the Ethereum blockchain that took effect in September 2022 and changed the way transactions are verified. The proof-of-stake model, which replaced the proof-of-work model, requires volunteers on the network to put up their ether tokens, or “stake” them, in order to secure the network.
Brookover says the agency has explicitly asked for the identities of public and private Consensys software developer code repositories.
“Those are very strange requests from a financial regulator,” continued Brookover. “I can speak to that, because I used to be in the CFTC’s enforcement division and investigated cases myself.”
Multiple coders and industry executives have told CNBC that it is possible the SEC could be taking more of an interest in Ethereum, because the regulator thinks its native token functions more like a security after the merge.
Brookover told CNBC that their suit asks the court to declare both that ether is not a security and that the SEC lacks jurisdiction to investigate Ethereum. Ultimately, the regulator will have to respond to the Consensys complaint in a legal filing.
“They’re going to be hard pressed not to stay in their answer whether they think Ethereum is a security or not,” said Gerold, adding that he suspects that the agency will take the position that it is a security because of the proof-of-stake change that took effect two years ago.
One thing the SEC has been clear on is its classification of bitcoin as a commodity. With ether, the narrative has changed.
In 2018, when Bill Hinman was still the Director of the Securities and Exchange Commission’s Division of Corporation Finance, he told CNBC that, “When we look at bitcoin or if we look at ether and the highly decentralized nature of the networks, we don’t see a third-party promoter where applying the disclosure regime would make a lot of sense.”
“So we’re comfortable…viewing these as items that don’t have to be regulated as securities,” continued Hinman.
In April 2023, when Rep. Patrick McHenry (R-N.C.) asked SEC Chair Gary Gensler whether ether was a commodity or a security, Gensler demurred.
SEC vs. crypto
Gensler has, in multiple interviews, repeatedly shared that he believes much of the industry already belongs under its jurisdiction, and its lawsuits are simply bringing the industry under compliance. Crypto firms argue that the recent legal battles haven’t given the regulatory clarity the industry has been seeking for years.
With the Uniswap Wells notice, for example, a source at the company told CNBC that dealing with the SEC was akin to “talking to a wall.”
For two years preceding the Wells notice, Uniswap described the protracted interactions with the agency as an opaque process that involved responding to multiple requests, including giving testimony and sending several documents to the agency, without getting much feedback about the regulator’s concerns around potential wrongdoing. This source also told CNBC they had not heard from the regulator at all in 2024 until the agency told them in a half-hour phone call that they would be receiving a formal notice.
Both Consensys and Uniswap suggest the SEC’s broad approach to classifying securities may be outdated.
“The SEC is arguing that the Uniswap protocol is an unregistered securities exchange, and that the Uniswap interface and wallet are both unregistered broker brokers,” Ammori said.
But Uniswap argues that the protocol itself is a general purpose computer program that anyone can use and integrate.
“So the protocol is not an exchange also, because under the law, it would have to be specifically designed for securities trading, and it is not,” continued Ammori.
Uniswap argues in its response to the SEC that the majority of its trading volume is obvious non-securities, like ether, bitcoin, and stablecoins.
“It’s not run by a group, as the definition requires, but as autonomous software no person or group controls,” added Ammori.
“The SEC knows that the current definition of exchange does not cover the protocol, or anything we do. That’s why as we speak, there’s a pending rulemaking, for the SEC is trying to redefine about a half dozen words in their own regulations to try to capture us,” contined Uniswap’s chief legal officer.
Alma Angotti, partner and global legislative and regulatory risk leader at the consulting firm Guidehouse, cautions that it is less clear whether decentralized exchanges function like an alternative trading system, or a market maker — or whether they really are just a technology that does not act as a broker dealer.
Meanwhile, as the SEC ramps up its focus on decentralized players in the crypto ecosystem, centralized players also remain under scrutiny by the regulator.
In May, investment platform Robinhood announced it received a Wells notice for the company’s crypto operations. The SEC has also sued Coinbase and Binance. With multiple pending legal challenges from the regulator and enduring uncertainty about the future of crypto regulation in the U.S., multiple crypto businesses have said they are considering decamping from the country altogether.
“We’ve got companies that are wasting resources trying to figure out, ‘Am I a broker dealer? Are these assets securities?'” said Binance’s former chief compliance officer, Christina Rea.
“We’re already having a hard enough time trying to get them to be compliant with other important laws — anti-money laundering laws, anti-bribery and corruption laws.”
On Thursday, the commission will issue a decision on whether to approve one of the spot ether ETF applications after a multi-month delay. Many are waiting to see whether the regulator will offer clarity on its stance on ether.
The Phoenix-based electric bike maker Lectric Ebikes has been on a tear lately, launching updated versions of its wildly popular electric bicycle models. The latest in a string of affordably priced updates is the new Lectric XPeak off-road e-bike, packing a surprising amount of tech and upgrades for a surprisingly low price of just $1,399. And to sweeten the deal even further, the launch promotion includes over $300 in free accessories, too.
It’s all pretty much par for the course at Lectric, which has spent years growing its lineup of affordable, popular e-bikes that offer some of the best bang-for-your-buck in the industry.
The XPeak 2.0 is the latest example, adding significant upgrades to the second generation version, including a new torque sensor for smooth and responsive pedal assist, plus surprisingly high-end components such as the RST Renegade front suspension fork.
“With the RST Renegade fork, excellent componentry, and an industry-leading low price, we knew the XPeak would be a hit,” explained Lectric eBikes co-founder and CEO Levi Conlow. “While the 2.0 version gets even better with a torque sensor and bigger battery options, most importantly, we knew we had to give our riders what they expect from Lectric: the same low price as the first model.”
At just $1,399, Lectric has kept the price of its newest off-road e-bike the same as the first generation while offering impressive specs.
The 750-watt Stealth M24 motor (which actually puts out around 1,300W of peak power) has become a staple of Lectric’s e-bikes, providing more power and torque than most other e-bikes in this class. In fact, with 85 Nm of torque, Lectric’s models often make it to the top of the hill quicker and more reliably than other brands in head-to-head tests.
Like most of the company’s models, the Class 3 XPeak 2.0 can reach a top speed of 28 mph (45 km/h) on pedal assist, as well as 20 mph (32 km/h) on throttle-only riding.
In addition to the standard 15Ah battery offering 60 miles (96 km) of range, there’s a new 20Ah battery for an even longer lasting 80 miles (130 km) of range. Both battery options are easily removable for charging either on or off of the bike.
The XPeak 2.0’s structural changes compared to the first generation include a new hydroformed aluminum frame, lock-on hand grips, a larger 203 mm front disc to give the hydraulic brakes even more stopping power, and a new color LCD display.
The bike also gets new blacked-out fork stanchions for a stealthier look and comes in the Tempest Grey colorway for the high step frame and stratus white for the easy-to-mount step-through frame option.
For safety, the XPeak 2.0 has been certified to ISO 4210-10, a rigorous electric mountain bike standard testing that covers the structure of the bike, as well as UL-compliance to UL 2849, a standard that covers an e-bike’s battery, controller, motor, and other electronic components.
The Lectric XPeak is now available for pre-order, starting at $1,399. The company is also offering $365 in free accessories bundled with pre-orders, including a rear rack, fenders, elite headlight, bottle-shaped bike lock, and suspension seat post.
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Kia’s upcoming entry-level EV has finally made its way to the famous Nurburgring for testing. The EV4 hatch was spotted ripping across the track, nearly on two wheels at one point, as Kia preps for its big debut.
According to Kia, the EV4 is “an entirely new type of EV sedan. ” It was first unveiled last October during Kia’s first annual EV Day, alongside the EV3 and EV5 as part of its new low-cost lineup.
The EV5 launched in China last year, while the EV3 is already rolling out in Korea and Europe. Next up, we will finally see the production version of the EV4.
Although its four-door format suggests it’s a sedan, Kia said the EV4’s bold design is a symbol of the company’s innovation. Its low nose, long-tail silhouette, and added roof spoiler give it an almost racecar-like feel.
With its official debut approaching, Kia’s EV4 has been spotted out in the wild several times. Last week, it was caught testing in the US for the first time.
A hatchback model has also been spotted. It was first caught on European roads this summer and in the US earlier this month.
Kia EV4 (back) showcased alongside EV9 (left) EV3 (middle), and EV5 (right) (Source: Kia)
Kia EV4 hatch takes on the Nurburgring as debut looms
After the EV4 was spotted racing across the Nurburgring for the first time, we are getting our best look yet at the upcoming Kia model.
The video from CarSpyMedia shows the EV4 hatch carving up sections of the track. Several times, you can see the EV4 is being pushed to the limits, nearly going up on two wheels.
Kia EV4 hatch testing at Nurburgring (Source: CarSpyMedia)
However, with a low center of gravity and likely added stabilization tech, the EV4 appears to handle it with ease. You can also see the difference between the sedan model and the hatchback, with the bulky backside.
As it takes on the track, it almost looks like the 576 hp EV6 GT, Kia’s fastest and most powerful car. At least for now.
Kia EV4 sedan concept (Source: Kia)
Kia is expected to officially reveal the EV4 by the end of the year, with deliveries starting in 2025. Prices are expected to be in the $30,000 to $40,000 range. The hatchback model is likely aimed at Europe, but it could also find a market in the US as buyers drift toward more efficient options.
Ahead of the LA Auto Show later this week, Kia is teasing five new vehicles for the US, at least one being an EV. Will it be the EV4? EV3?
Source: CarSpyMedia
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Elon Musk is hinting at Tesla making bigger electric cars, but you shouldn’t hold your breath as it’s not the first time he said that.
In the last few hours, Musk responded to two fans on X, asking Tesla to build bigger vehicles to support larger families.
Musk often promotes the idea of having bigger families as he is afraid of declining populations due to low birth rates in some countries.
With the first one, the CEO responded with a simple “OK,” and with the other, he elaborated a bit more by referencing the recently unveiled Tesla Robovan and “some other things”:
Musk appears to be hinting at Tesla’s work on a bigger electric vehicle that has yet to be unveiled.
While interesting, it’s hard to give too much weight to the comment, considering Musk claimed that Tesla has been working on a higher passenger capacity vehicle for years.
A “high passenger-density urban transport” vehicle has been in Tesla’s official product roadmap since 2016 and has yet to be unveiled, unless you count the Robovan unveiled last month, but that’s completely attached to Tesla’s self-driving effort as the vehicle has no steering wheel or pedals.
As part of Tesla’s shift toward autonomous driving, the automaker has pulled back plans for several new electric vehicle programs in favor of those without any driver inputs, like Cybercab and Robotvan.
Tesla is expected to soon unveil two new vehicles to be launch next year, but those are based on the Model 3 and Model Y and therefore, they aren’t likely to be bigger vehicles.
Electrek’s Take
Like most things Elon says lately, it goes in my “I’ll believe it when I see it” folder.
That said, I think an electric van that can be configured for cargo, camper, or passenger, would make a ton of sense in Tesla’s vehicle lineup.
Of course, it’s harder to get the greenlight for a vehicle program like that if your CEO is perpetually convinced that the company is on the verge of achieving self-driving and making steering wheels obsolete.
I’m more of the opinion that Tesla should have played it more careful and continue working on growing its human-driveable EV lineup while working on self-driving.
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