The United States Securities and Exchange Commission (SEC), led by Chairman Gary Gensler, has been classifying Ethereum as a security for over a year now. As reported by FOX Business, Consensys, a company that develops Ethereum software, filed a detailed complaint against the SEC in response to this revelation.
The complaint reveals that the SEC’s investigation into Ethereum 2.0 is based on the suspicion that certain securities, including ETH, have been offered and sold since 2018. Consensys’ legal action further discloses that the SEC has been requesting various documents over the past year to understand the company’s involvement in the proof-of-stake (PoS) update, as well as its acquisitions, holdings, and sales of Ethereum. There are indications that the SEC may view Ethereum sales prior to the 2018 merger as securities.
This latest development is in contrast to the previous stance taken by former SEC Chairman Jay Clayton, who, along with then-CFO Bill Hinman in June 2018, had stated that Ethereum, like Bitcoin, is not considered a security. Gensler’s recent testimony, where he hesitated to definitively classify Ethereum’s regulatory status, has caused concern within the crypto industry. Some speculate that Ethereum’s shift to a proof-of-stake mechanism through the Merge has made it more akin to a security.
In response to the SEC’s actions, Consensys has taken legal measures to prevent the regulator from overseeing the Ethereum blockchain. The company’s decision to challenge the SEC was prompted by a Wells notice received on April 10, indicating impending enforcement actions related to Consensys’ MetaMask wallet services. Consensys has emphasized that MetaMask is not a brokerage service and does not store digital assets or facilitate transactions.
As the situation unfolds, Consensys is urging the SEC to acknowledge the protective measures in place for spot Ethereum ETFs.