Consensys, a prominent blockchain firm based in the US, has fired a legal salvo against the Securities and Exchange Commission (SEC) in a move to prevent the regulatory body from seizing control over the Ethereum blockchain.
Lawsuit Challenges SEC’s Authority Over Ethereum
Filed on Thursday, the lawsuit accuses the SEC of waging a “campaign to seize control over the future of cryptocurrency.” Consensys is seeking a definitive ruling from a Texas federal court that Ethereum is not a security and therefore falls outside the SEC’s jurisdiction.
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Today, Consensys took an important step towards preserving access to ether and by extension the Ethereum blockchain in the U.S. We are suing the SEC and fighting back against its overzealous regulatory overreach. You can find more of my thoughts here: https://t.co/VmvOsrCxjw… https://t.co/5IubZo69FW
— Joseph Lubin (@ethereumJoseph) April 25, 2024
The lawsuit goes further, requesting assurances that any SEC investigations into Consensys based on Ethereum’s classification as a security would violate the company’s Fifth Amendment rights and the Administrative Procedures Act. Additionally, Consensys seeks clarification that its MetaMask wallet doesn’t constitute a brokerage and that its staking services comply with securities laws.
Consensys Cites Potential Disaster for Ethereum
The lawsuit underscores the potential consequences of the SEC’s actions: “The SEC’s unlawful seizure of authority over ETH would spell disaster for the Ethereum network, and Consensys.”
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This legal challenge comes amid ongoing debate about cryptocurrency regulations in the US. SEC Chair Gary Gensler has previously stated that many digital assets fall under the SEC’s purview as unregistered securities. Bitcoin remains the only cryptocurrency currently classified as a commodity, placing its regulatory oversight under the Commodity Futures Trading Commission (CFTC).
Consensys Joins Growing List of Crypto Firms Suing SEC
This lawsuit adds Consensys to a growing roster of cryptocurrency companies taking legal action against the SEC to seek regulatory clarity. Coinbase previously sued the SEC for similar reasons. The SEC, on the other hand, has been cracking down on perceived lapses in regulatory compliance within the crypto industry, with ongoing legal battles against heavyweights like Ripple, Coinbase, and Binance.
Strategic Move Following Wells Notice
The lawsuit appears to be a strategic response by Consensys after receiving a Wells Notice from the SEC on April 10th. This notice indicates the SEC’s intent to pursue enforcement actions against the company regarding its MetaMask wallet services. Consensys maintains that MetaMask is not a broker and doesn’t handle customer assets or perform transactions.
The outcome of this legal battle will be closely watched by the cryptocurrency industry, with significant implications for the future of Ethereum and the broader regulatory landscape for digital assets.