Consensys Sues SEC, Challenging Ethereum’s Security Classification

• Consensys, the Ethereum software company, has filed a lawsuit against the US Securities and Exchange Commission (SEC).

Consensys, the Ethereum software company, has filed a lawsuit against the US Securities and Exchange Commission (SEC). 

The legal action alleges that the SEC is attempting to gain control over the future of cryptocurrency and intends to classify Ethereum as a security.

In the 34-page complaint, Consensys argues that the SEC is overstepping its regulatory boundaries under the leadership of Chair Gary Gensler. 

The company highlights a previous statement from an agency official in 2018, affirming that Ethereum (ETH) should not be treated as a security.

Consensys contends that the SEC’s attempt to regulate ETH as a security is misguided since Ethereum lacks the characteristics of a traditional security. 

See Also: EU Passed New Anti-Money Laundering Regulation: Here’s What it Means to Crypto

The company seeks a preemptive declaration that Ethereum is not a security, filing the lawsuit in response to receiving a Wells Notice from the SEC regarding MetaMask, a product developed by Consensys. The Wells Notice is a preliminary letter signaling potential regulatory action.

Consensys alleges that the SEC’s enforcement actions against the company and others are part of an effort to gain regulatory dominance by punishing those who have relied on government assurances that ETH is not a security. 

The SEC’s stance on Ethereum’s classification holds significant implications, as the regulator has pursued legal action against numerous crypto firms for violating securities laws through the sale of unregistered securities. 

Other regulatory bodies, such as the Commodity Futures Trading Commission (CFTC), consider Ethereum a commodity.

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