Ethereum Plunges After SEC Chair Says Crypto Could Be Security

Mike Letterman

Sep 19, 2022, 12:41 PM
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Gary Gensler, chair of SEC, testifies during a Senate Banking, Housing and Urban Affairs Committee hearing in Washington, D.C., on Thursday, September 15, 2022.

The price of ether continued to plunge over the weekend after a technical change on the network and comments from the head of the SEC that ether might need to be treated as an asset. The most popular digital currency in the world, bitcoin, is down 8% to just $18,420, while the second most popular digital currency, ether, is down over 10%.

Last Thursday, the network was upgraded to a Proof-of-Stake system. Proof-of-work required so-called "miners" to have their computers play guessing games to verify transactions. People who already hold ether can use proof-of-stake to verify transactions in exchange for longer term interest.

There's a problem here. Since very few people actually use ether to pay for things, moving to a Proof-of-Stake system means that people who invest in ethereum and then take their ether are treating their investment as a security rather than a currency. Gary Gensler, chairman of the Securities and Exchange Commission, made comments after the merger that are making investors nervous.

The investing public is anticipating profits based on the efforts of others, according to a report from the Wall Street Journal.

Two popular coins that use proof-of-stake are Cardano and Solana. Cardano and Solana are both down from a year ago.

The all-time high of $68,000 was reached on November 9, 2021. In the fall and winter of 2021, you were able to see all those TV commercials from celebrities. It was funny how they were telling you to buy at the top when smart money was leaving their positions. TheEther Foundation sold a lot of ether in November. Either they are lucky or they are a Ponzi scheme.

Click through to see how the top cryptocurrencies are doing. Over the past week, everything is down as well. Cardano is down 10.7%, Solana is down 8.6%, and Doge coin is down 8.5%. Polkadot is down 12%, Shiba Inu is down 1.4%, and Lido Staked ether is down 10.7%.