Tech
Cryptocurrency Firm Consensys Sues SEC Over Ethereum, Asks Court to Declare ETH as Non-Security
The fight between the U.S. Securities and Exchange Commission (SEC) and cryptocurrencies has intensified, with Consensys suing the regulator in a Texas federal court.
According to Thursday’s complaint, Consensys, a major Ethereum backer, wants the court to declare ETH non-security. The complaint comes as a means to forestall an impending SEC lawsuit against it over features of its Meta Mask wallet.
Consensys Files Lawsuit Against SEC
In its latest filing, Consensys noted that the SEC, through its focus on ETH, has brought significant legal uncertainty to the cryptocurrency industry.
The 34-page document highlighted the illegality of the SEC’s efforts against Ether and noted that the move was sending ominous signals to the entire cryptocurrency industry and blockchain technology.
JUST IN: 🇺🇸 Cryptocurrency Firm Consensys Sues SEC, Asks Court to Declare Ethereum $ETH it’s not a title.
— Watcher.Guru (@WatcherGuru) April 25, 2024
Recall that the securities regulator has set its sights on the Ethereum Foundation and associated companies in a move to classify ETH as a security. This has sparked controversy in the industry regarding pending applications for ETH Spot ETFs.
Furthermore, the SEC’s efforts against Ether pose a significant threat to Ethereum and its associates, such as Consensys. Furthermore, the company’s filing noticed the critical implications if the agency were to succeed in declaring ETH a security.
Label the SEC’s intention to label Ether’s security as “illegal”, but this move will not bring any disaster to the Ethereum network.
Every ETH holder, including Consensys, would be cautious when transferring ETH onto the network for fear of violating securities laws. As a result, people in the United States will stop using the Ethereum blockchain, crippling one of the Internet’s greatest innovations, the filing says.
SEC steps up crackdown on cryptocurrency industry
The SEC has increased its pressure with more aggressive enforcement approaches against the cryptocurrency industry. Under Gary Gensler, the commission has released several lawsuits against Ethereum-related companies.
The regulator has requested certain documents related to the Ethereum blockchain in its crackdown.
Many within the crypto space have condemned the regulator’s enforcement actions. Some believe the SEC’s expanded authority amounts to totalitarianism and an invasion of privacy.
The latest filing indicated that the SEC issued a Wells Notice to Consensys earlier this month. Such a notice is a formal warning of the agency’s plan to sue an entity and usually ends in a settlement.
In the filing, Consensys disclosed that the SEC has targeted its wallet, MetaMask. The agency informed Consensys that MetaMask operates as an unlicensed broker-dealer via a phone call.
Regulator frowns as MetaMask offers users a way to stake Ethereum without being properly registered as a securities broker. In a Fortune interviewConsensys founder Joe Lubin described the SEC’s theory that betting on ETH would make its safety absurd.
According to Lubin, staking is just a way to post collateral that proves your contributions to the Ethereum blockchain are being paid. It doesn’t make Ether a security.
Lubin cites Gensler’s legal position as an attempt to curb cryptocurrency growth and justify the SEC’s refusal to approve pending ETH spot ETF applications. According to the Consensys founder, the SEC’s aggressive moves to regulate a technology like cryptocurrency where it shouldn’t stifle innovation.
Disclaimer: The views expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile and high-risk asset class.
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