Apr 25, 2024 - Business

Consensys files preemptive lawsuit against SEC over Ethereum

Illustration of the SEC seal's shadow looming over a pixelated coin.

Illustration: Maura Losch/Axios

Consensys, the Ethereum blockchain company founded by Joe Lubin, sued the Securities and Exchange Commission Thursday seeking to head off any coming enforcement action.

Why it matters: One of the biggest Ethereum firms is striking back amid an ongoing campaign by the SEC to classify the world's second largest digital asset a security.

  • "We are hopeful that the case brings attention to — and ultimately halts — the SEC's reckless approach," Lubin said in a press statement.

Between the lines: The firm is seeking injunctive relief, "preventing the SEC from continuing any investigation or commencing an enforcement action" against it as it relates to the premise that ether transactions are securities transactions, the lawsuit reads.

  • Consensys has been subject to "coercive investigation" by SEC staff and in 2023 received three subpoenas containing two dozen distinct requests for information, according to the lawsuit.
  • On April 10, 2024, the SEC staff sent Consensys a Wells Notice for allegedly violating the federal securities laws through its MetaMask Swaps and MetaMask Staking products.

The bottom line: Consensys wants a court to say that ether is not a security, that its MetaMask wallet is not a broker, and that its staking service didn't violate federal securities law.

Go deeper