- Uphold’s Research Head doubts Ethereum’s decentralization amid rapid growth.
- Experts argued ETH subtly used “decentralization” as a legal shield for securities fraud.
- They highlight potential regulatory bias and satirical legal tactics.
In a recent tweet, Martin Hiesboeck, the Head of Research at the Uphold exchange, expressed skepticism about Ethereum’s claim of being a “decentralized blockchain.” He stated that Ethereum’s rapid growth is not indicative of true decentralization.
According to Hiesboeck, Ethereum is not decentralized in reality, alleging it is controlled by a small group of individuals and companies, essentially forming a corporate entity. He argued that as Ethereum adds more layer-two and zero-knowledge proof solutions, it becomes even more centralized, deviating from the original ideals of cryptocurrency. Hiesboeck believes that this deviation will ultimately prove unsustainable over time.
People are excited about #Ethereum – a “ decentralized blockchain” grew faster than any other tech. That isn’t true. Ethereum isn’t decentralized. It’s owned and manipulated by a handful of individuals and companies which together are a corporate entity by any other name. $ETH… pic.twitter.com/D5sa9w1YYE— Dr Martin Hiesboeck (@MHiesboeck) September 30, 2023
Hiesboeck’s tweet included an image that highlighted Ethereum’s impressive achievement of generating $10 billion in revenue within just seven years, surpassing the timeline of top software companies by almost half.
Meanwhile, Steven Nerayoff, an early adviser to Ethereum, responded to Hiesboeck’s tweet by shifting the gears to the alleged preferential treatment Ethereum supposedly got from the U.S. regulator.
In particular, he cited a scenario where a project commits securities fraud and used an “innovative” legal strategy to have the U.S. SEC declare that the cryptocurrency in question was not a security. Nerayoff argued it would be carried out by creating a confusing legal basis, such as “decentralization,” which nobody, including the U.S. agency itself, fully understands.
A prominent pro-XRP lawyer, Bill Morgan, acknowledged that such a move to evade being convicted for security law violation via a ‘decentralization’ basis could truly be an “innovative” legal strategy.
You could say “innovative” legal strategy. And who better to target with that strategy than a director of a key SEC division whose role is to provide advice to companies and no-action and interpretive letters (and public speeches apparently). https://t.co/6o0Aoa9MaY pic.twitter.com/ZmUsxEZIuo— bill morgan (@Belisarius2020) September 30, 2023
Moreover, the lawyer pointed out that one potential strategy for the execution is to target a director of a key SEC division responsible for advising companies.
Notably, Nerayoff and Morgan’s tweets are satirical. They sought to highlight how the SEC overlooked Ethereum founders without charging them for security offerings via the ETH token. In contrast, the regulator charged other similarly decentralized blockchain chains such as XRP.
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