Consensis, a United States-based blockchain firm, has launched legal action against the Securities and Exchange Commission (SEC) to prevent the regulator from overseeing the Ethereum blockchain. The lawsuit filed yesterday (Thursday) called the regulator’s efforts a “campaign to gain control over the future of cryptocurrency”.
A strategic case
The lawsuit argued that if the SEC continued to exercise its authority over Ethereum, it would cripple the blockchain, “crippling one of the Internet’s greatest innovations.”
Consensys revealed that its actions against the SEC came after receiving a Wells notice on April 10 indicating the regulator was preparing to take enforcement action against the company over its Metamask wallet services. The company highlighted that Metamask is not a broker and “does not hold customers’ digital assets or process any transactions.”
Today, Consensys took a significant step toward preserving access to Ether, and through the expansion of the Ethereum blockchain in the US, we are suing the SEC and fighting its overzealous regulatory overreach. You can find more of my thoughts here: https://t.co/VmvOsrCxjw… https://t.co/5IubZo69FW
— Joseph Lubin (@ethereumJoseph) 25 April 2024
Interpretation rules
With the lawsuit, the blockchain company is seeking a Texas federal court ruling that Ethereum is not a security and not under the SEC’s jurisdiction. Furthermore, the security requires assurances that any inspection by the company of Ethereum’s premises “would not violate” his Fifth Amendment rights and the Administrative Procedure Act. Additionally, the lawsuit seeks a ruling that Metamask is not a broker and that the staking services offered by the platform do not violate securities laws.
“The SEC’s unlawful seizure of ETH would spell disaster for the Ethereum network and Consensus,” the lawsuit states.
Ethereum’s position is in the balance because the chair of the SEC, Gary Gensler, previously said that many digital currencies are unregistered securities and fall under the purview of regulators. Bitcoin is the only cryptocurrency that the regulator considers a commodity, giving its regulatory powers to the Commodity Futures Trading Commission.
Meanwhile, Coinbase sued the SEC over its interpretation of crypto-centric rules. However, the regulator took action against several crypto companies for flouting the rules, and is now fighting a legal battle with several big names such as Ripple, Coinbase and Binance.
This article is written by Arnab Shome at www.financemagnates.com.