A legal battle between Consensys and the US Securities and Exchange Commission (SEC) took a new turn after a Texas federal court dismissed Consensys' lawsuit against the regulator. The dismissal was based on the court's decision that the important issue in the matter, an SEC investigation into Ethereum, had already been resolved, rendering the lawsuit unnecessary.
Court Dismisses Consensys' Claims
However, despite this outcome, Consensys maintains that the SEC is overstepping its regulatory authority, particularly concerning MetaMask, one of its key products. The US District Court for the Northern District of Texas concluded that Consensys' lawsuit against the SEC lacked merit since the original legal danger prompting the suit had already ceased.
The case initially arose after the SEC listed Consensys among companies under investigation for Ethereum-related activities, leading Consensys to sue the regulator for what it described as “overreach.” The lawsuit specifically sought a ruling that Ethereum's ether was not a security and that MetaMask's staking service did not violate federal securities laws.
In April 2024, Consensys filed a lawsuit to protect the Ethereum ecosystem from the SEC’s regulatory overreach and stand up for the industry that has been subject to the agency’s reckless enforcement agenda. Unfortunately, the Texas court today dismissed our lawsuit on…
— Consensys (@Consensys) September 19, 2024
According to the court documents, Judge Reed O'Connor explained that, due to the lack of ongoing investigation into Ethereum, there was no immediate threat to Consensys. In response to the court's decision, Consensys described the closure of the SEC's Ethereum investigation as a “significant win” for the broader crypto industry.
MetaMask Still Under Scrutiny
Despite the dismissal of the Ethereum-related claims, Consensys' legal troubles with the SEC are far from over, Coindesk reported. In June, after concluding the Ethereum probe, the SEC filed charges against Consensys, alleging that its MetaMask service was functioning as an unregistered securities broker. The charges raise questions about the role of decentralized applications and crypto wallets in the US financial regulatory framework.
In June, the SEC closed its investigation into Ethereum, the second-largest cryptocurrency by market capitalization, as a security. According to a report by Finance Magnates, Consensys confirmed that the decision came after the blockchain company asked the regulator to “confirm that the approvals, which were premised on ETH being a commodity, meant the agency would close its Ethereum 2.0 investigation.”
ETHEREUM SURVIVES THE SEC.Today we’re happy to announce a major win for Ethereum developers, technology providers, and industry participants: the Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0. This means that the SEC…
— Consensys (@Consensys) June 19, 2024
The regulatory status of crypto assets in the US remains unclear as the country pushes to regulate the emerging space. The lawsuit was a response to a Wells Notice issued against Consensys over the services of its MetaMask wallet.
This article was written by Jared Kirui at www.financemagnates.com.
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