Jim Cramer, a one-time hedge fund manager and the host of CNBC’s Mad Money, believes Dogecoin (DOGE/USD) is a security, and people should be careful while investing in the token. He shared his sentiments through a tweet on January 20, noting that investing in the 11th-largest cryptocurrency is a dangerous venture.
His outlook on DOGE likely emanates from the fact that the DOGE network prints a lot of new coins every day, 14.4 million tokens to be precise. In contrast, the Bitcoin (BTC/USD) network only mints around 900 coins in a day.
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However, the DOGE community criticized Cramer’s views on the meme coin, with creator Billy Markus, who goes by Shibetoshi Nakamoto on Twitter, urging him to learn how the blockchain works. Markus added that the community already knows the number of coins in circulation and how many the network creates every day.
Markus further noted that the information is in the public code on the public blockchain, meaning that anyone can easily access it.
Neeraj Agrawal, the Director of Communications at Coin Center, also thought it was absurd that Cramer believes the crypto space needs the SEC to find out how many DOGE tokens are in circulation.
DOGE fails the Howey Test
Preston Byrne, an Anderson Kill partner who specializes in decentralized protocols, pointed out that Cramer’s assertion that DOGE is a security is wrong.
He pointed out that,
When we ask whether a token is regulated as a security, properly an ‘investment contract,’ under U.S. federal law, the question centers on whether the thing is a contract, transaction, or 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 added that DOGE’s anarchic, jokey start and the lack of a central coordinating entity means it fails the Howey Test. To this end, he concluded that the token does not qualify as a security, meaning it does not fall under the regulatory scope of the SEC.
This news comes as DOGE continues performing deplorably amid the market-wide bearish trend. At the time of writing, the canine-themed token is trading at $0.1532 (£0.11) after shedding 7.03% of its value over the past 24 hours.
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