Steven Nerayoff, a former advisor to Ethereum (ETH), has stirred controversy by accusing Gary Gensler, the Chair of the US Securities and Exchange Commission (SEC), of clandestine connections with Ethereum. Nerayoff’s claims, made publicly, have reignited debates over regulatory transparency and the alleged influence of the Chinese Communist Party (CCP) in the cryptocurrency sector.

With growing speculation around an Ethereum ETF, it's evident that the SEC, led by Gary Gensler, is more involved in ETH than it appears. Gensler's indirect approval for @PrometheumInc to designate ETH as a security effectively endorses an ETF covertly.

This decision shows that… pic.twitter.com/i0TVEdLDfq

— Steven Nerayoff (@StevenNerayoff) February 12, 2024

Nerayoff’s allegations revolve around Gensler’s purported involvement with Ethereum, particularly concerning the imminent launch of an Ethereum Exchange-Traded Fund (ETF). He contends that the SEC, under Gensler’s leadership, has undisclosed ties with Ethereum, leading to the approval for Prometheum Inc., a securities marketplace, to classify ETH as a security.

This move, perceived as an indirect nod towards an ETF by the SEC, has raised eyebrows among Republican lawmakers, who question the transparency of the decision-making process. Nerayoff suggests that such approvals extend beyond regulatory formalities and could potentially be influenced by entities with deep ties to the CCP.

Moreover, Nerayoff’s assertions touch upon the broader issue of Ethereum’s decentralization, with concerns about the CCP’s alleged control over approximately 66.6% of the ETH supply. These findings, speculated by on-chain researcher TruthLabs, cast doubt on Ethereum’s decentralized framework.

The CCP has taken over Crypto by being Ethereum's largest hidden whale, with an ownership estimation on my end of near 66.6% of the Eth supply today. They've clearly compromised the SEC, and CFTC, with Prometheum being given the ONLY Special Purpose Dealer Broker license for… pic.twitter.com/C5eCrGUH7d

— TruthLabs 🫡 (@BoringSleuth) February 8, 2024

Nerayoff’s credibility, however, has been questioned in light of his past legal entanglements. Accused of extorting a cryptocurrency startup during his advisory stint, Nerayoff faced criminal charges that were eventually dropped by a New York judge. Despite the resolution of these charges, Nerayoff’s claims underscore the complex legal landscape faced by individuals in the cryptocurrency industry amid regulatory scrutiny.