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- Consensys sued the SEC after it wanted to act against its MetaMask product
- Blockchain firm also requested that the court declare Ethereum not to be a security
Consenys has made a new move to clarify that Ethereum is not a securities. Joseph Lubin founded the blockchain company that has now sued United States Securities and Exchange Commission and five of its commissioners.
Consensys has filed a suit against the Securities and Exchange Commission today.
This is done to maintain Ethereum as a vital and essential blockchain platform, while preserving access to the many developers, institutions, and market participants.
Consensys, @Consensys April 25, 2024
In a court document, it is revealed that on 10th April the SEC sent the company a Wells Notice notifying them of their intent to enforce. This action concerned MetaMask’s MetaMask Swap, and MetaMask Staking. MetaMask, a cryptocurrency wallet created by Consensys that focuses on Ethereum’s blockchain is the MetaMask.
SEC asserted that these products were in violation of the Securities Act because they were acting as broker-dealers without registration. Firm countered the argument, claiming Ethereum wallet is just an interface and does not store digital assets nor process transactions.
Ethereum: Is it a Security?
This document also reveals the Commission’s changing position regarding Ethereum. Previously, the commission claimed that ETH wasn’t a security. The Commodities and Futures Trading Commission, (CFTC), backed up this claim by stating that ETH was under their jurisdiction because it is classified as a commodities.
SEC’s position is not the same as the CFTC. In the last few months, SEC’s position has changed. The commission also stated that Lay the Foundation Mark the second largest cryptocurrency by market capital as a securities.
Consensys’ lawsuit addressed this issue.
The SEC land grab violates the core principles of fair notification and due process. The “fundamental principal” is essential to ensure due process. . . “Laws that regulate individuals or entities are required to give fair warning of prohibited or mandatory conduct.”
The blockchain company also claimed that “it built its business on the Ethereum blockchain (…) after the SEC had assured the public that ETH was outside of its jurisdiction”. In the lawsuit, it was stated that Consensys relied on SEC and CFTC statements that ETH wasn’t a security.
The firm is suing to have the court declare that “ETH does not qualify as a Security under Securities Act, and Consensys’s sale of ETH do not constitute a Securities Act transaction.”
The firm also asks the court to rule that any enforcement action taken against it based on ETH being a security is an abuse of power. It also wants to declare a lawsuit against MetaMask as overreaching and prevent the SEC from “pursuing any enforcement actions or investigations based on ETH transaction being securities transactions”.