The <a href="https://www.cryptoknowmics.com/news/securities-exchange-commission-sec-investigating-melvin-capital">Securities Exchange Commission (SEC)</a> has asserted that Ethereum transactions took place in the United States because ETH nodes are "clustered more densely" in the country compared to any other nation. The SEC lawsuit was <a href="https://www.sec.gov/litigation/complaints/2022/comp-pr2022-167.pdf">filed</a> on September 19 against crypto scientist and YouTuber Ian Balina, which claimed, among other issues, that Balina offered Sparkster (SPRK) tokens without registering them when he established an investment group on Telegram in 2018.

The Ethereum contributions were verified when U.S.-based investors joined Balina's investment pool through a system of Ethereum blockchain nodes, according to the SEC, which is packed more densely in the United States than in any other nation.
<h2>Validity of SEC Lawsuit</h2>
The validity of such a lawsuit in court and the existence of any guiding legal precedent is currently unclear. However, <a href="https://ethernodes.org/countries">according</a> to Ethernodes, 42.56% of the 7807 Ethereum nodes are now in the United States.

According to Dr. Aaron Lane, an Australian lawyer and Senior Research Fellow at the RMIT Blockchain Innovation Hub, the distribution of Ethereum nodes is mainly irrelevant to the present case. While acknowledging the merits of the SEC's allegation, Lane emphasized that, even if Balina's attorneys accept the jurisdictional issue, it will not, at least for the time being, have any effect on current or future proceedings:

“The defense may concede jurisdiction here, and if they do it won’t be an issue, and if it’s not a contested issue then the court won’t say anything about it. Any concern about legal precedent at this stage is premature. "

Before this, the SEC received criticism for its strategy of regulating cryptocurrencies, which some have called "regulation by enforcement."
<h2>Balina’s Response to Allegations</h2>
Gary Gensler, the chairman of the SEC, recently suggested that shortly after Ethereum switched to proof-of-stake on September 15, Ether-based staking would potentially be subject to U.S. securities regulations. In response to the complaint, Balina in a Twitter thread claimed that the allegations were baseless and that he had turned down compensation, so the SEC had to prove themselves.

In response to the SEC's assertion that the country should have jurisdiction over transactions based on Ethereum due to the high concentration of nodes there, Balina chose not to respond.

Balina's accusations coincide with Sparkster's and its CEO Sajjad Daya's recent <a href="https://www.sec.gov/litigation/admin/2022/33-11102.pdf">settlement</a> with the SEC on September 19, which agreed to reimburse $35 million to "harmed investors" following their ICO in 2018.

All of Ethereum Nodes Fall Under US Jurisdiction, Claims SEC Lawsuit

The SEC lawsuit against Ian Balina claimed that Balina offered Sparkste tokens without registering them when he established an investment group on Telegram.

Gungun is an enthusiastic writer that likes to create content for various aspects of the blockchain and crypto industry. She carries out extensive research and provides readers with informative and high-quality material.

All of Ethereum Nodes Fall Under US Jurisdiction, Claims SEC Lawsuit

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