Consensys, a major supporter of the Ethereum blockchain, has taken legal action against the Securities and Exchange Commission (SEC) in Texas federal court. The lawsuit aims to prevent an upcoming SEC lawsuit regarding features of the popular MetaMask wallet and to clarify that Ethereum’s digital token, Ether, is not a security.
In a 34-page legal filing, Consensys argues that the SEC’s attempt to assert jurisdiction over Ethereum is unlawful and poses a threat to blockchain technology. The company claims that if the SEC were to control Ether, it would bring the use of the Ethereum blockchain in the United States to a halt.
SEC Chairman Gary Gensler has been cracking down on leading companies in the crypto industry, including Coinbase and Uniswap. This enforcement campaign has involved subpoenas requesting documents related to dealings with the Ethereum Foundation.
The controversy over Ethereum stems from conflicting views on whether its tokens, like Ether, should be considered securities. Despite past statements from the SEC suggesting otherwise, Gensler seems to be focusing on Ethereum’s staking feature as a basis for legal action.
Consensys received a Wells Notice from the SEC, indicating the agency’s intention to sue. The SEC reportedly considers MetaMask to be operating as an unlicensed broker dealer due to its staking feature.
Consensys founder Joe Lubin criticized the SEC’s stance on staking, arguing that it does not transform Ethereum into a security. He believes that Gensler’s actions are aimed at restricting crypto growth and preventing the launch of Ethereum spot ETFs.
The lawsuit filed by Consensys seeks various rulings, including declaring that Ethereum is not a security, that MetaMask is not a broker dealer, and that the SEC is violating certain laws. The industry’s strategy involves setting up potential appeals in the U.S. Court of Appeals for the Fifth Circuit.
The outcome of the lawsuit and potential SEC legal action remains uncertain. The industry is prepared for further legal battles to defend Ethereum’s status and blockchain innovation.