• Texas court dismisses Consensys lawsuit against SEC
• The lawsuit alleged SEC opened investigation into Ethereum and issued Wells notice to Consensys over MetaMask products
• Judge dismissed claims about MetaMask offerings and Ethereum investigation as moot
A lawsuit filed by blockchain company Consensys against the Securities and Exchange Commission (SEC) over an investigation into Ethereum and claims about unregistered securities was dismissed in a Texas court this week. The dismissal highlights the SEC’s ongoing scrutiny of the crypto industry.
The Consensys Lawsuit
Consensys, founded by Joe Lubin, filed the lawsuit against the SEC and Chair Gary Gensler in April 2022. The suit alleged that the SEC had opened an investigation into Ethereum and sent Consensys a Wells notice regarding potential enforcement action against MetaMask Swaps and MetaMask Staking products.
The notice indicates the SEC has concluded an investigation and is considering a lawsuit but doesn’t necessarily mean they will file suit. The claims about Ethereum in the lawsuit were dismissed as moot after the SEC announced it had dropped its Ethereum investigation this summer.
The SEC’s Response
While the SEC dropped its Ethereum investigation, it has since filed its own lawsuit against Consensys targeting MetaMask Swaps. The regulator alleged Lido and Rocket Pool are unregistered securities.
Judge Reed O’Connor dismissed the claims about MetaMask’s offerings, noting the enforcement actions don’t constitute final agency actions by the SEC.
Ongoing Crypto Scrutiny
The dismissal of Consensys’ lawsuit comes as the SEC continues scrutinizing and bringing enforcement actions against crypto companies. The regulator is focused on protecting investors as the crypto market grows. However, many in the industry feel the approach stifles innovation.
The outcome of high-profile cases like Ripple Labs will be influential. But for now, scrutiny and potential enforcement actions remain a risk for crypto projects, especially those offering staking or lending products.
Conclusion
While Consensys’ legal claims were dismissed, the lawsuit highlighted the SEC’s expanding crypto oversight. More enforcement actions are likely on the horizon as the regulator keeps a close watch on the industry. Companies like Consensys face ongoing uncertainty about how regulators will view their offerings.
