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SEC Is Dropping Its Investigation Into Ethereum, Consensys Says

source-logo  decrypt.co  + 34 more 19 June 2024 01:42, UTC

Leading Ethereum developer Consensys announced late Tuesday that the U.S. Securities and Exchange Commission is “closing its investigation” into the cryptocurrency.

“Today we’re happy to announce a major win for Ethereum developers, technology providers, and industry participants: the Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0,” the company posted on Twitter. “This means that the SEC will not bring charges alleging that sales of ETH are securities transactions.”

After the SEC approved Ethereum spot ETFs last month, Consensys said it sent a letter to the SEC noting that the funds “were premised on ETH being a commodity,” asking how the decision would affect the agency's investigation. (Disclosure: Consensys is one of 22 investors in Decrypt.)

Consensys attorney Laura Brookover separately posted the SEC's notification letter and the company's full statement on the SEC's move to Twitter.

“Things have changed remarkably fast since we filed our lawsuit against the SEC in late April, culminating in today’s development,” Brookover wrote. “After more than a year, the Ethereum investigation is finally over with no charges against anyone.”

The SEC's correspondence, however, included standard language that disclaimed that the notice that it concluded its investigation “must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result from the staff’s investigation.”

In April, Consensys went on the offensive, filing a lawsuit against the SEC that claimed the regulator was trying to “seize control over the future of cryptocurrency" and that it was planning to designate Ethereum as a security. In fact, the unredacted lawsuit revealed, Consensys alleged that the SEC had internally decided on the status of Ethereum a year prior.

The lawsuit was triggered by a Wells Notice—a precursor to regulatory action—Consensys said it received for its popular MetaMask wallet.

On Tuesday, Consensys made clear that it would continue to press its case against the SEC.

“In our lawsuit, we also seek a declaration that offering the user interface software MetaMask Swaps and Staking does not violate the securities laws,” the company said. “It should not take a lawsuit to provide the much-needed regulatory clarity to allow an industry that serves as the backbone to countless new technologies and innovations to thrive.”

While celebrating the SEC's decision to back off, the company remained staunchly critical of the agency's approach to crypto regulation.

“The closing of the Ethereum investigation is momentous, but it’s not a cure-all for the many blockchain developers, technology providers, and industry participants who have suffered under SEC’s unlawful and aggressive crypto enforcement regime,” Consensys added.

The SEC did not immediately respond to a request for comment from Decrypt.


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