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Blockchain software firm ConsenSys filed a lawsuit against the US Securities and Exchange Commission (SEC) because of its “unlawful power grab” in regulating Ethereum as a security.
ConsenSys argued that the SEC lacks the authority to regulate global peer-to-peer networks, and says its regulatory overreach with ETH and other crypto commodities is unlawful.
Today, Consensys took an important step towards preserving access to ether and by extension the Ethereum blockchain in the U.S. We are suing the SEC and fighting back against its overzealous regulatory overreach. You can find more of my thoughts here: https://t.co/VmvOsrCxjw… https://t.co/5IubZo69FW
— Joseph Lubin (@ethereumJoseph) April 25, 2024
The firm also argues that the SEC had previously classified Ethereum as a commodity, and noted that the Commodities Futures Trading Commission (CFTC) asserts authority over Ethereum by overseeing derivative products linked to Ether.
The SEC has been reframing its authority over ETH, redefining legal standards and language, to claim oversight over the blockchain, ConsenSys said.
ConsenSys Receives a Wells Notice from the SEC
The lawsuit filed against the SEC comes after ConsenSys received a Wells Notice from the regulator, indicating its intention to take an enforcement action against ConsenSys over the MetaMask wallet. The regulator says that ConsenSys violated securities laws through MetaMask.
The blockchain firm now wants a federal court to declare that Ether is not a security.
“If the SEC succeeds in designating Ether as a security, companies and developers would see years of work squandered and billions of dollars of economic value destroyed,” ConsenSys said.
The ConsenSys lawsuit comes after a Reuters report revealed that the SEC is unlikely to approve spot Ethereum ETFs. The regulator is expected to give a decision on these products on May 23.
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