Crypto Twitter honed in on the connection between SEC Chairman Gary Gensler and Algorand on Monday, after the agency filed a lawsuit against the cryptocurrency exchange Bittrex—claiming several tokens are securities simultaneously.
Algorand was one of six tokens named in the lawsuit as alleged examples of “crypto asset securities” available to customers on Bittrex’s platform. They are an essential part of the agency’s claims—proof that Bittrex supposedly operated as an unregistered exchange, broker-dealer, and clearing agency.
The lawsuit’s complaint dedicates nearly four pages to explaining the agency’s basis for claiming Algorand is a security, touching on the token’s initial sale in 2019 and public statements made by the Algorand Foundation in relation to the Howey Test.
Not long after the SEC filed its lawsuit against Bittrex, videos circulated on Twitter that showcased Gensler’s previous statements about Algorand. Crypto analyst and author @0xfoober accused the SEC boss of “shilling” the token before a crowd.
The clip comes from a 2019 talk Gensler gave at the MIT Sloan Idea Exchange, a conference hosted by the prestigious school back when Gensler was a professor, specializing in global economics and management.
“Silvio Micali’s Algorand—who’s a Turing Award winner at MIT that I work with—Silvio’s got a great technology that has performance,” he said, referencing the founder of Algorand. “You could create Uber on top of it.”
Indeed, the two did work together. During his time at MIT, Gensler was also the “co-director of MIT’s Fintech@CSAIL, and senior advisor to the MIT Media Lab Digital Currency Initiative,” according to the SEC’s website.
And Silvio Micali, who founded Algorand in 2017, has conducted research at the MIT Computer Science and Artificial Intelligence Laboratory (CSAIL). He’s also been a faculty member at the school since 1983, according to MIT’s website.
In a separate video that caught the attention of Crypto Twitter, Gensler mentions Algorand, Micali, and the Turing Award this colleague received. But, Gensler delves into greater detail this time, going on to explain some of Algorand’s unique features
“He’s got a company that has an interesting thing,” Gensler said, going on to compare Algorand’s consensus mechanism to a jury. “Again, I apologize if I’m a little oversimplifying Silvio’s brilliant work.”
Gary Gensler has been promoting Algorand for years
Now that the SEC ruled Algorand a security, is he going to get hit with the same $1.26 million dollar fine he gave Kim Kardashian?pic.twitter.com/ucuOOVxqPS
— LilMoonLambo (@LilMoonLambo) April 17, 2023
In sharing the video on Twitter, one user named @LilMoonLambo asked whether Gensler would be hit with a fine “now that the SEC ruled Algorand a security,” similar to the $1.26 million fine Kim Kardashian paid in relation to her promotion of a cryptocurrency called EthereumMax.
However, it’s important to note that the SEC can’t rule on whether a token is a security or not—they can only claim that one is. The rest is for a court to decide. Additionally, the $1.26 million Kardashian paid was done so without her admitting or denying the SEC’s findings, making the claim that EthereumMax is a security moot—at least in the context of the SEC’s complaint against Kardashian.
The premise of the SEC charges brought against Kardashian also centered on the idea that she was paid a significant amount of money to promote EthereumMax on her Instagram account without disclosing that information to her followers—there was an undisclosed exchange of money for exposure.
Accompanying the lawsuit, Gensler released a video on the topic of celebrity promotion, warning America’s investing public that “celebrity endorsements […] don’t mean that an investment product is right for you or even, frankly, legitimate.”
Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security.
This case is a reminder that, when celebrities / influencers endorse investment opps, including crypto asset securities, it doesn’t mean those investment products are right for all investors.
— Gary Gensler (@GaryGensler) October 3, 2022
Is it possible that Gensler was paid to promote Algorand? Possibly. But at the same time, his comments made about Algorand could’ve just been him highlighting the work of a colleague as a gesture of kindness or appreciation.
The SEC did not immediately respond to requests for comment from Decrypt.