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US SEC Drops Inquiry on Ether’s Security Status

Shalini Nagarajan
Last updated: | 2 min read
Ether security

The SEC has ended its investigation into whether Ethereum’s Ether token is a security, according to Ethereum developer Consensys.

“The Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0,” Consensys said in an X post on June 19.

“This means that the SEC will not bring charges alleging that sales of ETH are securities transactions.” The developer cheered the SEC’s decision as a major victory for everyone involved in Ethereum’s development, technology, and industry.

Following the SEC’s approval of Ethereum spot ETFs last month, Consensys sent a letter to the SEC, saying these funds were based on ETH being classified as a commodity. It inquired about the implications of this decision on the agency’s ongoing investigation.

SEC Avoids Firm Ether Classification


On X, Consensys attorney, Laura Brookover, shared both the SEC’s official response and a detailed company statement regarding the SEC’s decision.

“Things have changed remarkably fast since we filed our lawsuit against the SEC in late April, culminating in today’s development. After more than a year, the Ethereum investigation is finally over with no charges against anyone,” she said.

The SEC’s letter didn’t state anything definitive about Ethereum. It avoided classifying it while using typical legal wording to basically indicate that the end of investigation doesn’t mean the agency agrees with Consensys’ statements.

Consensys Alleged Overreach in Crypto Regulation in SEC Lawsuit


In April, Consensys sued the SEC over its “overzealous regulation.” It claimed the regulator was being overly aggressive in its attempts to control the future of cryptocurrency, specifically by planning to label Ethereum a security. The lawsuit even claimed the SEC had already made this decision internally a year earlier.

Further, Consensys challenged the SEC’s authority, arguing that the agency can only regulate securities and had previously said Ether wasn’t one. This lawsuit followed a warning from the SEC that Consensys’ MetaMask wallet might be breaking securities laws.

In its June 19 statement, Consensys showed it remains firm in its opposition to the SEC’s actions concerning MetaMask. It plans to keep fighting the SEC on this issue.

“In our lawsuit, we also seek a declaration that offering the user interface software MetaMask Swaps and Staking does not violate the securities laws,” the firm said. “It should not take a lawsuit to provide the much-needed regulatory clarity to allow an industry that serves as the backbone to countless new technologies and innovations to thrive – but here we are.”

The price of Ethereum token rallied on the heels of this news as it trades above $3,500, nearly 3.5% up in the last 24 hours.