In a series of tweets, Steven Nerayoff argued that the Ethereum network has been centralized from the beginning, making ETH an investment contract. He alleged that Ethereum co-founder Joseph Lubin made speculative purchases during the ICO, acquiring 9.5% of the coins as stated by a former project participant.
These allegations have surfaced during an ongoing legal dispute between Joseph Lubin and the US Securities and Exchange Commission (SEC). Recently, Lubin’s company Consensys has filed a lawsuit against the regulator, seeking to prevent it from classifying ether as a security. Nerayoff has described this lawsuit as an attempt to conceal collusion between Ethereum and the SEC.
According to Stephen Nerayoff, Lubin met with former SEC official Bill Hinman just before the latter’s widely-known speech in 2018 regarding the status of cryptocurrencies. In that speech, Hinman declared that ether does not qualify as a security. The ex-Ethereum team member is convinced that the coordinated efforts of the co-founders aimed to conceal the true centralization of the network, contradicting their claims of decentralization.
Furthermore, Nerayoff accused the SEC of having a bias against Ripple, which has been embroiled in a legal battle with the regulator for several years while trying to prove that its XRP coin is not a security. The former Ethereum consultant urged US authorities to leave Ripple alone and hold the Ethereum team accountable.
To add to the controversy, Steven Nerayoff has recently sued the US government, seeking $9.6 billion in damages for an alleged extortion of 10,000 ether from a cryptocurrency startup.