Consensys Files Lawsuit Against the SEC Over Ethereum Regulation

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Tanzeel Akhtar

Journalist

Tanzeel Akhtar

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Tanzeel Akhtar has been covering the cryptocurrency and blockchain sector since 2015. She has written for the Wall Street Journal, Bloomberg, CoinDesk, Bitcoin Magazine and Bitcoin.com.

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April 25, 2024 15:33 EDT

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Ethereum developer firm Consensys, managed by Joe Lubin, filed a lawsuit on April 25 against the U.S. Securities and Exchange Commission (SEC) over its “overzealous regulation” around the Ethereum blockchain.

In an announcement on social media platform X, Lubin said Consensys has taken 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.”

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

SEC’s Reckless Approach Brings Chaos

In a blog post, the firm said the SEC’s reckless approach is causing chaos to developers, market participants, institutions, and nations that are building or already managing critical systems running on Ethereum, the world’s largest platform for decentralized applications. 

The firm went on to add that the SEC only has jurisdiction over securities and, until recently, has declared that ether is not and should not be treated as a security.

Consensys stressed that the SEC should not be allowed to arbitrarily expand its jurisdiction to include regulating the future of the Internet.

Ether is the native token of the Ethereum blockchain. It can be traded as a commodity (like oil), but it is also essential to the technological development of applications built on Ethereum – including applications that have clear, non-financial utility for vital sectors like healthcare, energy, transport, media, agriculture, and beyond.”, the post read. “The SEC’s approach would make it impossible for developers to innovate and build, because it would classify non-financial platforms as financial applications thus requiring the SEC’s oversight and approval.”

Coinbase Lawsuit Against SEC

This latest lawsuit by Consensys mirrors a recent Coinbase filing.  In March, it emerged that Coinbase had filed a lawsuit against the SEC, seeking a court directive for the regulatory authority to establish clear guidelines for the cryptocurrency sector.

In the lawsuit detailed in their March 11 court submission, Coinbase challenged the SEC’s lack of formal rulemaking for the crypto sector, asserting that the agency’s actions hindered the industry’s development and clarity.

SEC’s Absence of Digital Asset Rulemaking

The filing criticized the SEC for its passive stance on crypto regulation, arguing that the absence of specific rules has left the sector navigating a regulatory grey area.

Most recently, SEC Commissioners Hester Peirce and Mark Uyeda have publicly criticized the agency’s unclear cryptocurrency enforcement policies following a recent settlement with ShapeShift.