Consensys Sues SEC Over 'Illegal Power Grab' Over Ethereum

Ethereum developer Consensys has filed a lawsuit against the US Securities and Exchange Commission, striking back at what the company calls the federal regulator's «illegal power grab» over Ethereum.

The company wants a federal court to declare that ETH (ETH) is not a security, any ConsenSys investigation based on the idea that ETH is a security would «violate» the company's Fifth Amendment rights and the Administrative Procedures Act, which MetaMask is not a broker under federal law that MetaMask's betting service does not violate securities laws and an injunction against the SEC investigating or bringing enforcement actions related to MetaMask's swaps or betting functions.

In a complaint filed Thursday against the SEC and all five of its members, Consensys said it received a Wells Notice from the SEC on April 10 indicating an intent to bring an enforcement action against the company for violating securities laws through its MetaMask wallet.. Consensys denies it is acting as a broker, saying the wallet is «simple and interface-based» and «does not store clients' digital assets or perform any transactional functions.»

The complaint adds that the SEC's attack on Ethereum contradicts its own past statements that cryptocurrency is a commodity and not a security (citing a 2018 speech by former director Bill Hinman), as well as the SEC's subsidiary regulatory agency, the Commerce Commission. commodity futures. (CFTC), Ethereum's own authority, which controls derivative products pegged to Ether.

In its lawsuit, Consensys argues that it has “built its business against the backdrop of this regulatory consensus,” and the SEC’s new power grab—which it calls a “pivot”—over Ethereum would therefore “violate the constitutional fair notice requirement under the Due Process Clause legal procedure.»

“The SEC's illegal seizure of power over ETH SPELL is a disaster for the Ethereum network and Consensys,” the lawsuit states.

The lawsuit also relies on the “essential issues doctrine,” a Supreme Court ruling that bars federal regulators from wildly overstepping their congressional mandates.. Two judges have already rejected the idea that Crypto falls under this doctrine during arguments brought by Terraform Labs and Coinbase.

ConsenSys filed the lawsuit in the U.S. District Court for the Northern District of Texas, joining groups like the Blockchain Association and companies like Legit Exchange that have filed similar preemptive lawsuits seeking to stop the SEC from treating certain crypto companies or assets as securities.

In recent months, the SEC has also filed lawsuits against crypto exchanges like Binance.US, Binance and Kraken. Earlier this month, Uniswap Labs said it had also received a Wells notice from the regulator.