On the SEC and GG, among other thoughts

Gary Gensler (GG) is the head of the securities exchange commission (SEC) in the United States.

He has gone in front of the US congress many times recently. Here is the most recent livestream: https://www.youtube.com/watch?v=4f3DNFxrqJc

He lectured about blockchain at MIT for a semester (or more). In those lectures, he hints at his vision of tokens as securities. Here is the best video so far that reveals the most about what he thinks: https://www.youtube.com/watch?v=JPkgJwJHYSc

Now, I will provide my perspective from where GG stands and what is to come. And where hex stands.

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GG thinks many cryptocurrencies may be securities. He also thinks that Coinbase needs to register with the SEC as a securities exchange because they are trading things that may be securities. There are a couple qualities of which he looks for in determining if a token is a security. I will talk on the two most important question GG asks himself when determining if something is a security.

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1. Is there a leadership team for the coin? Are the investors into these projects investing with the expectation of profit from the work of others? E.g. are the cardano investors expecting profit once the cardano developers roll-out smart contracts? The answer seems to overwhelmingly be "yes." My guess is that cardano, in the eyes of the SEC chair, is a security.
2. Is there a pre-sale for the launch of the coin (ICO) and subsequent expected profit for the investors? Was the pre-sale a securities offering? E.g. the ethereum launch raised $18 million in its launch phase to raise money. GG thinks that this was a securities offering, but the SEC, 4 years after the launch, deemed ethereum as decentralized enough for ethereum to not be a security.
   

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Where hex falls with these two questions:

1. RH is obviously the leader of the HEX community. But there is no expectation of profit from the work of others in the hex community. The HEX code launched complete, is immutable, and cannot be stopped. RH cannot change anything. Thus, there cannot be any expectation of HEX profit from the work of RH. All of the interest gained from staking is done through the crypto code. Not by people. You own your own keys, you mine your own hex.
2. Firstly, hex was given for free to bitcoin holders. That is not a pre-sale quality. Secondly, the ethereum that was "swapped" for hex during the launch phase resulted in hex delivery to the investors (effectively, a trade). Where the money went is unknown, however, regardless, it does not match the definition of a securities offering. "A securities offering is done to fund operations, expansion, a capital project, an acquisition, or some other business purpose." It is my interpretation that the launch of hex cannot be a securities offering because the hex code moving forward cannot have any changes! There cannot be any operations to fund, and expansion to fund, or another business project because there is no changing the code! That cannot be said for many of the tokens out there being traded today. Furthermore, if you assume the pre-sale money did go to developers of hex--- wait, there is no development team! (Also note the pulse sacrifice was not a pre-sale! There is no expectation of profit from the work of others.)

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My questions to you, as I would like to learn something (I will provide an answer to a couple of them to show where I stand):

- What are some other takes on answering these questions?

- What are some other points that GG takes into consideration when asking himself if the token is a security?

- How can we encourage those that do not know about hex to do their own research? (which is NOT, by the way, going on youtube and listening to some talking head spout about their interpretation of hex)

- What else would you like to talk about?

- What will happen to the tokens that are securities?

It is in my view that GG may think that ethereum may be a security due to the promise of ETH 2.0, and the development team, lead by Vitalik, working to improve the project. I think similarly about cardano. Both of these project have the history of promising return from the work of others, and have had updates to their system. What will the SEC do?

- Let's have a fun thought experiment-- let's assume the SEC finds that hex is a security. What happens? Well, they would go after the development team. Wait, who would they go after? Hex doesn't have a development team! And even if there was one, and we assume these people get thrown in jail, there is no stopping the immutable beautifulness that is hex! There are multiple front-ends and there are multiple places to trade hex. There is no stopping it, there is no changing it, there is just the running hex code. It is for these reasons that I sleep very well at night being all in on the fastest accumulating asset in history.

- Should hex be tradable on coinbase?

In my opinion, no. Hex is censorship resistant. Coinbase is a dumpster fire under the SEC microscope. Best if we stay with trustless code outside of centralized exchanges. Simple as that, to me.

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As always, do your own research. Read up. Listening to others' interpretation of events/words on the internet is not doing your own research. NFA.