SEC Investigates Ethereum's Security Designation With Crypto Exchanges

Cryptocurrency

Consensys Fights for Ethereum, Sues SEC to Block Regulation – Crypto News

Published

1 year ago

April 26, 2024

Dripp

Ethereum developer Consensys has initiated a lawsuit against the U.S. Securities and Exchange Commission (SEC). The company aims to prevent the regulator from classifying ETH as a security. This lawsuit was filed in the District Court for the Northern District of Texas.

Consensys Sues SEC Over Ethereum Classification

Consensys contests the SEC’s recent actions, which suggest Ethereum might be treated as a security. The company received a Wells notice on April 10, signaling the SEC’s intention to enforce securities laws against Consensys for its MetaMask wallet product. Consensys refutes the claim that it operates as a broker, emphasizing that MetaMask merely serves as an interface and does not manage customer assets or transactions. The firm argues that this classification could undermine the longstanding understanding of Ethereum as a commodity, not a security.

The lawsuit also references a 2018 speech by former SEC Director Bill Hinman, which indicated that Ethereum was seen as a commodity. Moreover, the Commodities Futures Trading Commission (CFTC), which oversees derivative products linked to Ethereum, has also recognized cryptocurrency as a commodity, adding to the regulatory confusion.