When Web 3 advocates complain that the mainstream press doesn’t understand cryptocurrencies, they may be talking about Jim Cramer.
Cramer, the former hedge fund manager and former host of CNBC’s “Mad Money” show, warned of the dangers of Dogecoin (DOGE) more than nine months after its price and popularity soared.
He tweeted: “Please be careful with Dogecoin… It’s a security. It will be regulated. We will find out how many are out there and how many are being created every day to make money for brokerages.”
You can imagine what happened next. Basically, people in the industry disagreed with all of his points.
In the tweet, the TV personality perhaps alluded to the Dogecoin network’s tendency to issue many new DOGEs every day (14.4 million new tokens precisely).
This makes it difficult for demand to keep up with supply. In contrast, the Bitcoin network issues around 900 new BTCs every day.
However, the problem with the tweet is: We already knew that. However, the above number is courtesy of the website. The Street, co-founded by Cramer. And how The Street Did you know about this high emission rate?
Let’s let Billy Markus, co-creator of Dogecoin, Explain: “Man, please understand how the blockchain works… It’s in the public code of the public blockchain, easily viewable by anyone”.
But Cramer was also wrong with his claim that Dogecoin is a security, says Preston Byrne, a partner at Anderson Kill law firm that specializes in decentralized protocols.
“When we ask whether a token is regulated as a security, properly as an ‘investment contract’, under US federal law, the question centers on whether the asset is a security or a scheme involving the investment of money in a common enterprise. with the expectation of profits arising from the efforts of a promoter or third party,” Byrne explained to Decrypt via email, referring to the famous Howey Test created by the US Supreme Court in the 1940s.
“Dogecoin’s playful and anarchic start and the total lack of a central coordinating body means that several of Howey’s ends go unmet, in my professional opinion.”
In other words, DOGE is not a security and would not fall under the supervision of the US Securities and Exchange Commission (or SEC).
At best, it’s a commodity, and Byrne points out that the Commodity Futures Trading Commission (or CFTC), the SEC’s sister agency, considers it as such.
In fact, Dogecoin started out more as a joke rather than a moneymaking venture. Both people who launched the project (Markus and Jackson Palmer) have since abandoned it.
It wasn’t until after Elon Musk took to Twitter to promote the project that DOGE caught a lot of attention.
The price jumped from a fraction of a cent to start 2021 at $0.73 on May 8 (when Tesla CEO mentioned it on the “Saturday Night Live” show), before losing nearly 80% of its value in the months following.
But perhaps we are being tricked by Markus, Palmer or one of the Dogecoin part-time developers who now operate the project. Maybe they are manipulating everything all the time. In that case, you would have to hold back your laughter.
*Translated and edited by Daniela Pereira do Nascimento with permission from the Decrypt.co.