Consensys Presses Forward with SEC Lawsuit After Investigation is Dropped: Report
Julia Smith
Last updated:
June 20, 2024, 11:45 EDT
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2 min read
Consensys, the blockchain software company, will proceed with its legal action against the United States Securities and Exchange Commission (SEC) after the federal agency abandoned its investigation into the Ethereum (ETH) developer, according to Joseph Lubin, the founder of Consensys, who confirmed this to Fox Business journalist Eleanor Terrett on Thursday.
SEC Ends Investigation Into Consensys Regarding ETH Ecosystem
Lauding the news of the federal regulator’s decision to close its 14-month investigation into Ethereum as a “positive development,” the co-founder of Consensys argued that there must be a more effective method for regulating the market than through surprise attacks.
“We are optimistic that the hostility towards crypto from certain US regulators is starting to diminish and that the national investor protection strategy will progress beyond the current guerrilla tactics,” stated Joseph Lubin. “In the meantime, we persist with our legal proceedings against the SEC in Texas because we are committed to achieving greater legal clarity for everyone.”
Consensys Will Continue Lawsuit Against SEC, Co-founder Affirms
Notwithstanding this development, Consensys will persist with its legal action against the SEC in Texas, aiming to obtain clarity on the legal status of cryptocurrencies.
The lawsuit originated from Consensys’ April filing subsequent to receiving a Wells Notice from the SEC. This notice informed the blockchain organization of the agency’s intention to pursue enforcement action regarding the company’s crypto wallet service, MetaMask.
In a blog post in June 2024, Consensys argued that the investigation was unjustified given the declaration of ETH as a commodity in 2018. Additionally, in a letter sent to the SEC on June 7, Consensys acknowledged the recent approval of spot Ethereum ETFs, asserting that this move would solidify ETH’s status as a commodity in the eyes of the law.
Following these developments, the SEC, under the guidance of Gary Gensler, confirmed its decision to drop the investigation into the Ethereum ecosystem in a letter on June 18. Nevertheless, the letter clarified that this dismissal did not necessarily exempt Consensys from future inquiries.
This decision represents a significant legal triumph for Consensys against the SEC’s contentious approach of regulating the cryptocurrency sector through enforcement actions.
Consensys’ lawsuit argues that the company “is built on creating software products that enable people around the world to use and build on top of the Ethereum network.” The company asserts that it should be able to operate its business without the burden and uncertainty of unlawful enforcement actions.
The ongoing lawsuit against the SEC can be interpreted as a direct challenge for the regulator to reconsider its stance on cryptocurrencies or potentially face repercussions.
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