A US district court dismissed the lawsuit filed by Ethereum software giant Consensys against the U.S. Securities and Exchange Commission yesterday, September 20th, due to a lack of “final” relevant actions by the regulator.
Texas federal court Judge Reed O’Connor declared that Consensys “has not identified final agency action that would render the claim fit for judicial review and because withholding consideration subjects Plaintiff to scant, if any, hardship, the claim lacks a ripe case or controversy,.”
This is the latest turn of events in a legal battle that has been going on since April when Consensys filed a lawsuit against the SEC claiming that their regulatory actions would “jeopardize the United States’ ability to use Ethereum and similar blockchain technology.”
Why did Consensys file a lawsuit against the SEC?
Consensys filed the lawsuit preemptively after receiving warning of the SEC’s impending lawsuit against their MetaMask Ethereum wallet for alleged securities violations. The SEC closed their “Ethereum 2.0” investigation on whether sales of $ETH constituted securities transactions in June.
But later that month, the SEC sued Consensys over its MetaMask Swaps crypto staking feature because the agency believes it gives investors too much risk without sufficient protection.
In their lawsuit, Consensys alleges that the SEC still views Ethereum as a security internally and they sought confirmation from the regulator that this was not the case.
“The U.S. Securities and Exchange Commission seeks to regulate ETH as a security, even though ETH bears none of the attributes of a security—and even though the SEC has previously told the world that ETH is not a security, and not within the SEC’s statutory jurisdiction,” the original lawsuit claimed.
Consensys’ response to the ruling
Following Judge O’Connor’s dismissal of their case, Consensys released the following statement:
“In April 2024, Consensys filed a lawsuit to protect the Ethereum ecosystem from the SEC’s regulatory overreach and stand up for the industry that has been subject to the agency’s reckless enforcement agenda,” a Consensys spokesperson said. “Unfortunately, the Texas court today dismissed our lawsuit on procedural grounds without looking at the merits of our claims against the SEC.”
“Our suit against the SEC laid bare the overzealous investigation of Ethereum, and policymakers and the public at large voiced deep concern over the SEC’s investigation of blockchain software development,” the statement continued.
“Outside of court, we have also seen signs of what could be a momentous step change in Washington’s sentiment towards cryptocurrencies and digital assets during a crucial period for U.S. politics.”
“We are on the right path, but must remain vigilant. Consensys is resolved to keep fighting for the rights of blockchain developers in the U.S. as we contest the SEC’s action in Brooklyn.”
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