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Consensys Moving Forward With SEC Lawsuit After Dropped Investigation: Report

Julia Smith
Last updated: | 2 min read
A golden scale of justice with an Ethereum logo hanging in the middle, representing the legal battle between Consensys and the SEC.
Consensys is challenging the SEC’s approach to crypto regulation. Learn more about the Consensys' SEC lawsuit.

Consensys will go ahead with its lawsuit against the United States Securities and Exchange Commission (SEC) after the federal agency dropped its probe against the Ethereum (ETH) developer, the blockchain software company’s founder Joseph Lubin confirmed to Fox Business journalist Eleanor Terrett on Thursday.

SEC Drops Investigation Into Consensys Over ETH Ecosystem

Calling news of the federal regulator’s decision to close its 14 month investigation into Ethereum a “welcome development,” the Consensys co-founder claimed that there “has to be a better way to regulate the market than through ambush”

“We are hopeful that the antagonism to crypto among some US regulators is starting to wane and that the national investor protection strategy will evolve from the current guerrilla tactics,” Joseph Lubin continued. “Until then, we soldier forth with our litigation against the SEC in Texas because we are intent on achieving more legal clarity for all.”

Consensys Will Continue Lawsuit Against SEC, Co-founder Says

Despite this development, Consensys will continue its litigation against the SEC in Texas, seeking clarity on the legal status of crypto.

The lawsuit stems from an April filing by Consensys following a Wells Notice from the SEC.

This notice informed the blockchain organization of the agency’s intention to pursue an enforcement action regarding the company’s crypto wallet service, MetaMask.

Consensys argued in a June 2024 blog post that the investigation was unwarranted given the 2018 declaration of ETH as a commodity.

Additionally, in a letter sent to the SEC on June 7, Consensys acknowledged the recent approval of spot Ethereum ETFs, asserting that this move would solidify ETH’s status as a commodity in the eyes of the law.

Following these developments, the SEC, led by Gary Gensler, confirmed its decision to drop the investigation into the Ethereum ecosystem in a June 18 letter.

However, the letter also clarified that this dismissal did not necessarily exempt Consensys from future inquiries.

This decision represents a notable legal victory for Consensys against the SEC’s controversial regulation-by-enforcement approach to the cryptocurrency sector.

Consensys’ lawsuit contends that the company “is built on creating software products that allow people around the world to use and build on top of the Ethereum network.”

The company maintains that it deserves to run its business without the burden and uncertainty of unlawful enforcement actions.

The continued lawsuit against the SEC can be viewed as a direct challenge for the regulator to reconsider its approach to cryptocurrencies or face potential consequences.