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MetaMask developer Consensys has asked a Texas Federal Court to declare that Ethereum is not a security in a pushback against sweeping SEC enforcement action.
Consensys filed a lawsuit against the U.S. SEC over what it describes as the agency’s illegal attempt to reframe its constitutional authority to include oversight on Ethereum (ETH), crypto’s second-largest decentralized network.
According to the blockchain developer, the SEC has wrongly labeled ETH as a security and adopted a “reckless approach” that will stifle innovation if left unchecked.
“We have time and time again witnessed the current SEC contradict itself with ever-changing views on the blockchain, consistently mischaracterizing this technology and what is built on it as a shallow and doomed investment scheme, rather than as the breakthrough technology it is.”
Consensys announcement on SEC lawsuit
Today, Consensys filed a lawsuit against the Securities and Exchange Commission.
— Consensys (@Consensys) April 25, 2024
The goal behind this is to ensure that Ethereum remains a vibrant and indispensable blockchain platform and to preserve access for the countless developers, market participants, and institutions…
The 34-page legal document disclosed on April 25 argued that the SEC enforcement rampage could also undo the work Congress has achieved regarding stablecoin policy and drive technological advancement outside U.S. borders.
Consensys stated that this “aggressive SEC regulatory overreach” extends beyond U.S. capital markets and is counterproductive to the watchdog’s original remit.
Consensys fights back
The complaint from MetaMask’s creator comes as the SEC has increased its litigation efforts against the crypto industry and asked for an additional $158 million to muzzle the “wild west” digital asset ecosystem.
Furthermore, the lawsuit is a response to a Wells Notice issued against Consensys earlier this month, which suggested that MetaMask may be accused of operating as an unregistered broker-dealer entity.
The industry is also banding together to fight an investigation into the Ethereum Foundation, a non-profit organization dedicated to improvements within ETH’s ecosystem. As crypto.news reported last month, several companies and businesses received a voluntary inquiry from an unnamed state authority.
After being accused of federal violations, stakeholders like Coinbase and Kraken are battling the Wall Street securities regulator in court. Industry proponents and dissenting SEC Commissioners like Hester Peirce also insist that the agency has not provided clear rules for the nascent crypto market.