Ethereum
developer
Consensys
has
filed
a
lawsuit
against
the
U.S.
Securities
and
Exchange
Commission,
striking
back
against
what
the
company
calls
an
“unlawful
seizure
of
authority”
over
Ethereum
by
the
federal
regulator.
The
company
wants
a
federal
court
to
declare
that
ETH
(ETH)
is
not
a
security,
any
investigation
of
ConsenSys
based
on
the
idea
that
ETH
is
a
security
“would
violate”
the
company’s
fifth
amendment
rights
and
the
Administrative
Procedures
Act,
that
MetaMask
is
not
a
broker
under
federal
law,
that
MetaMask’s
staking
service
does
not
violate
securities
law
and
an
injunction
against
the
SEC
investigating
or
bringing
an
enforcement
action
tied
to
MetaMask’s
Swaps
or
Staking
functions.
In
the
complaint
filed
Thursday
against
the
SEC
and
all
five
of
its
commissioners,
Consensys
revealed
it
received
a
Wells
notice
from
the
SEC
on
April
10,
indicating
its
intention
to
bring
an
enforcement
action
against
the
company
for
violating
securities
laws
via
its
MetaMask
wallet
product.
Consensys
denies
that
it
acts
as
a
broker,
stating
that
the
wallet
is
“simply
and
interface”
and
“neither
holds
customers’
digital
assets
nor
carries
out
any
transaction
functions.”
The
complaint
adds
that
the
SEC’s
encroaching
authority
over
Ethereum
goes
against
its
own
past
statements
that
the
cryptocurrency
is
a
commodity,
not
a
security
(citing
former
director
Bill
Hinman’s
2018
speech),
as
well
as
the
SEC’s
sister
regulatory
agency,
the
Commodities
Futures
Trading
Commission
(CFTC),
own
authority
over
Ethereum,
which
oversees
derivative
products
tied
to
ether.
In
its
suit,
Consensys
claims
that
it
“built
its
business
against
the
backdrop
of
this
regulatory
consensus”,
and
the
SEC’s
new
grab
for
power
–
which
it
calls
an
“about-face”
–
over
Ethereum
would
therefore
“violate
the
Constitutional
requirement
of
fair
notice
under
the
Due
Process
Clause.”
“The
SEC’s
unlawful
seizure
of
authority
over
ETH
would
spell
disaster
for
the
Ethereum
network,
and
for
Consensys,”
the
suit
claims.
A
representative
for
the
SEC
declined
to
comment
on
the
suit.
The
suit
also
leans
on
the
“major
questions
doctrine,”
a
Supreme
Court
ruling
barring
federal
regulators
from
dramatically
exceeding
the
scope
of
their
Congressional
mandates.
Two
judges
have
already
rejected
the
idea
that
crypto
falls
under
the
doctrine
during
arguments
brought
by
Terraform
Labs
and
Coinbase.
ConsenSys
filed
the
suit
in
the
District
Court
for
the
Northern
District
of
Texas,
joining
groups
like
the
Blockchain
Association
and
companies
like
Legit
Exchange,
which
filed
similar
preemptive
suits
seeking
to
block
the
SEC
from
treating
certain
crypto
companies
or
assets
as
securities.
In
recent
months,
the
SEC
has
also
brought
suits
against
crypto
exchanges
like
Binance.US,
Binance
and
Kraken.
Uniswap
Labs
revealed
earlier
this
month
it
had
also
received
a
Wells
Notice
from
the
regulator.
UPDATE
(April
25,
2024
at
19:41
UTC):
Adds
that
the
SEC
declined
to
comment.
