Steven Nerayoff, a crypto expert and former Ethereum advisor, has expressed worries regarding the extent of Chinese influence and control within the Ethereum ecosystem. Nerayoff contends that the substantial control of tokens by the Chinese Communist Party represents a notable threat to the entire cryptocurrency sector.
China’s Strong Connections with Ethereum
Steven Nerayoff has brought attention to the significant involvement of the Chinese Communist Party (CCP) within the Ethereum network. In a post on X, Nerayoff argued that crypto enthusiasts are overlooking a concerning pattern concerning the CCP and Ethereum’s vulnerabilities. The former Ethereum executive cautioned that the Chinese Communist Party’s “stake in Ethereum poses a threat to the entire crypto realm”. Nerayoff’s remarks echoed the investigative findings of cyber investigator TruthLabs. According to TruthLabs, the CCP holds as much as 66.6% of all ETH in circulation. If this assertion holds true, this substantial concentration of ETH in wallets associated with the Chinese government heightens the risk of a centralized attack on the Ethereum network and undermines the blockchain’s credibility as a decentralized ecosystem. Both Nerayoff and TruthLabs believe that the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have been compromised.
Prometheum, the sole American registered securities platform, recently announced its decision to custody ETH as its inaugural digital asset. With deep ties to the Chinese conglomerate Wanxiang Group, Prometheum had previously secured unique approval from the SEC as the first and only special-purpose crypto broker-dealer.
According to Nerayoff, Prometheum’s categorization of Ethereum as a security goes beyond regulatory classification; it represents a move by entities closely connected to the Chinese Communist Party (CCP) to influence the narrative and dominate the crypto space. Nerayoff expressed concern over the lack of discussion on this issue, particularly from figures like @GaryGensler, Chair of the SEC, who granted Prometheum an unprecedented license, effectively allowing them to designate ETH as a security.
To What Extent Does the Chinese Connection Reach?
Ethereum has solidified its position as the leading smart contract platform, hosting numerous decentralized finance and non-fungible token projects. However, questions persist about the true decentralization of the Ethereum network.
The connection between Ethereum and China is not new. Founder Vitalik Buterin’s interest in China is well-documented, with efforts to learn Chinese dating back to 2014 and plans to release a Chinese-language version of the Ethereum white paper in 2015. Buterin also held the position of chief scientist at Wanxiang Blockchain Labs and was listed as a co-founder of the company in 2016.
Despite these ties, Ethereum must address concerns about centralization seriously to maintain its reputation as a decentralized network, particularly regarding its connections with Chinese entities.
