The company behind the MetaMask and layer-2 Linea wallets, ConsenSys , sued the SEC after receiving a warning letter from the securities commission.
ConsenSys sues SEC, rejecting the argument that Ethereum is a security. Photo: ConsenSys
Blockchain infrastructure company ConsenSys - an organization created by Ethereum co-founder Joseph Lubin and the developer of MetaMask wallet, layer-2 Linea and Infura service - has filed a lawsuit against the US Securities and Exchange Commission (SEC). object to the classification of Ethereum (ETH) as a security .
We took this step for two very basic reasons:
— ConsenSys (@ ConsenSys) April 25, 2024
(1) the SEC should not be allowed to arbitrarily expand its jurisdiction to include regulating the future of the internet by wrongly labeling ETH a security; and
(2) the SEC's reckless approach is bringing chaos to developers,…
According to the lawsuit filed against the SEC and all five commissioners of the commission in a court in New York state, ConsenSys 's lawyer said:
“The US Securities Commission is seeking to regulate ETH as a security, even though this currency does not have the characteristics of constituting a security, and in the past the SEC has also admitted that ETH is not a security and does not constitute a security. competent to manage this field.”
ConsenSys also revealed that the SEC has decided to list Ethereum as a securities and began targeting the company's MetaMask product, the oldest and most commonly used Ethereum wallet.
Last month, the SEC sent a Wells Notice to ConsenSys, officially confirming impending legal action against the company. ConsenSys 's lawsuit reads:
“The SEC claims that through providing this wallet software, ConsenSys was acting as a securities broker. However, MetaMask is essentially just a web browser-like interface that allows digital asset holders and projects to easily interact with the Ethereum network.”
Therefore, ConsenSys asked the court to clarify the case, ruling that Ethereum is not a security, ConsenSys is not a securities broker, MetaMask's Staking service does not violate securities regulations, and the SEC has violation of authority.
The company also provided evidence that the SEC had a different view on the legal status of Ethereum through a letter from commissioner Bill Hinman in 2018, as well as the argument that ETH is a commodity of the Asset Exchange Commission. Futures (CFTC), a financial regulatory agency with powers similar to the SEC.
As reported by Coin68 in March, there were rumors that the SEC was asking companies that had cooperated with the Ethereum Foundation to provide information , leading to speculation that the securities commission wanted to regulate ETH, as well as as threatening Ethereum ETF prospects. SEC Chairman Gary Gensler has so far refused to directly comment on the legal status of Ether, but has stated that with the exception of Bitcoin , the SEC's position is that all other cryptocurrencies can all be XEM securities .
Another famous DeFi project on Ethereum, Uniswap, also recently received a Wells Notice from the SEC , and declared its readiness to fight legally against the SEC.
Many legal experts in the cryptocurrency industry have spoken out in support of ConsenSys' actions. Legal Director of Coinbase, the platform that is also being sued by the SEC and is in the process of arguing in court, Mr. Paul Grewal said:
I know ETH is a commodity. You know ETH is a commodity. The CFTC knows ETH is a commodity. It's time for the SEC to admit that it still knows ETH is a commodity too. No more games. Thank you to @ ConsenSys for standing up against the SEC's unfair expansion of authority. https://t.co/8w7A4PBwUK
— paulgrewal. ETH (@iampaulgrewal) April 25, 2024
“I know ETH is a commodity. You also know ETH is a commodity. Even the CFTC knows ETH is a commodity. So it's time for the SEC to admit this too. Don't beat around the bush anymore. Thank you ConsenSys for standing up against the SEC's illegal abuse of power.”
ConsenSys 's latest revelations about the SEC's stance on ETH 's legal status make the chances of an Ethereum ETF approved in the near future even slimmer. On April 25, Reuters newspaper quoted an internal source saying that the probability of the SEC approving an ETH ETF is not high , because the committee has not had many conversations with fund founders in recent times like in the previous period. There is a Bitcoin spot ETF. However, CEO Larry Fink of BlackRock asset management group is still confident that even if ETH is XEM a security, this currency will still be created as an ETF product.
ETH price is reacting mildly negatively to the securities stance revelations from the SEC that were recently revealed by ConsenSys in its lawsuit.
1h chart of the ETH/ USDT pair on Binance at 08:30 AM on April 26, 2024
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