Consensys Sues SEC, Court Rules ETH Non-Security

Consensys, a cryptocurrency firm, is suing the SEC over Ethereum, requesting that the court rule that ETH is not a security. This case is similar to the Ripple Labs action against XRP, in which the SEC was forced to agree that XRP is not a security.

Consensys is a significant supporter of the Ethereum blockchain. The complaint was filed in a Texas federal court on Thursday.

Consensys Sues SEC Over Ethereum

Consensys wants to shift attention away from an imminent SEC action against them over the MetaMask wallet. The 34-page lawsuit complaint contains dramatic language stating that the SEC’s actions against ETH are illegal and endanger overall blockchain technology.

The controversy over whether Ethereum’s digital token, Ether, is a security has been a crucial issue for the SEC, particularly with Spot Ethereum ETF applications pending.

The SEC’s illegitimate takeover of control over ETH would be disastrous for the Ethereum network and Consensys. “Every ETH holder, including the crypto firm, would be concerned about violating securities laws if they transferred ETH on the network,” the complaint reads. “This would bring the use of the Ethereum blockchain in the United States to a halt, crippling one of the internet’s greatest innovations.”

SEC Fight Against Crypto Industry Continues

The SEC is now engaged in an aggressive enforcement campaign against the Bitcoin business. SEC Chairman Gary Gensler has issued multiple subpoenas requesting records connected to the Ethereum blockchain. 

As a result, several industry professionals have criticized these attempts, claiming they breach privacy and are authoritarian.

Furthermore, the Consensys complaint, filed on Thursday, states that the SEC issued a Wells Notice in early April. This formal letter informs the agency that it intends to sue a company. It frequently leads to a settlement soon after. 

According to the complaint, the SEC informed Consensys in a separate phone call that MetaMask was acting as an unauthorized broker-dealer. Instead of resolving Consensys’ claim in court, the SEC may file a new lawsuit based on the Wells Notice. However, their plan has yet to be discovered.