Barry Silbert manipulates market prices? He is accused by a US securities lawyer for his advocacy for ETC

U.S. securities law experts said that Barry Silbert's tweets, many of which were about ETC prices, and some "professional advice" shared with a short seller, could raise red flags for market regulators responsible for preventing price manipulation.

Barry Silbert as a trustee?

Barry Silbert’s continued promotion of Ethereum Classic (ETC) has once again attracted public attention. We reported on his questionable behavior and potential regulatory implications as early as a year ago. Now, some U.S. securities lawyers told Reuters that they believe Silbert’s tweets promoting ETC may soon attract the attention of U.S. regulators.

“It’s fraught with risk,” said Trace Schmeltz, a partner at the law firm Barnes & Thornburg. “I think if I were advising Silbert, I’d advise him to do it as a cryptocurrency expert rather than making specific comments about a particular cryptocurrency, especially one that he owns a lot of.”

Robert Long, a former senior attorney at the U.S. Securities and Exchange Commission (SEC) and current partner at law firm Bell Nunnally, said the U.S. Commodity Futures Trading Commission (CFTC) considers cryptocurrencies to be commodities and is able to “regulate manipulation and misconduct in the virtual currency markets.” Long, who also served as a federal prosecutor, added that the nature and timing of these statements could be of interest to the CFTC.

Professional advice

In addition to Twitter, Silbert recently began using another social platform, Discord. Publicly discussing with a follower about attending a DCG Ethereum Classic event in Hong Kong, Silbert wrote: "Pro tip: sell your ETC before the summit..." This exchange in particular could be considered a trading recommendation.

In response to Silbert posting the message on Discord, Schmeltz commented: “If you own a fund that’s issuing a security and the value of that security goes up and down with the value of a cryptocurrency and you’re telling people to sell off their holdings, that’s a problem.” He also warned that this could be “market manipulation.”

Silbert is the CEO of Grayscale, a subsidiary of Digital Currency Group (DCG). In April this year, the company launched the ETC Investment Trust, the first security that can invest in the price of ETC. Although this security is not registered with the SEC, it is still subject to US securities laws under regulatory exemptions.