A number of crypto firms have been taking on the U.S. Securities and Exchange Commision (SEC). The latest to do so is Ethereum infrastructure firm Consensys, which is counter-suing the regulator after receiving a Wells notice earlier this month.
In a lawsuit filed in the Northern District of Texas on April 25, Consensys challenged the SEC’s determination that ether is a security, subject to its jurisdiction.
The complaint also names SEC Chair Gary Gensler, and four other commissioners at the agency: Caroline Crenshaw, Jaime Lizarraga, Mark Uyeda, and Hester Pierce.
Today, Consensys took an important step towards preserving access to ether and by extension the Ethereum blockchain in the U.S. We are suing the SEC and fighting back against its overzealous regulatory overreach. You can find more of my thoughts here: https://t.co/VmvOsrCxjw… https://t.co/5IubZo69FW
— Joseph Lubin (@ethereumJoseph) April 25, 2024
Consensys revealed that it had received a Wells notice from the SEC on April 10, stating the regulator’s intent to bring an enforcement action against the firm for violating federal securities laws through its MetaMask swaps and staking products. Consensys has hired the same lawyers that are representing Coinbase in its legal battle with the SEC.
“The subpoenas do not just seek information on Consensys’s acquisitions, holdings, and sales of ETH,” said Consensys in the complaint.
“They also seek detailed information concerning the role of Consensys, including its software developers, in a host of Ethereum Improvement Proposals related to the Ethereum Merge, the transition from a proof-of-work to a proof-of-stake validation mechanism.”
Consensys took aim at the SEC and Gensler for backtracking on their own prior statements saying that ether is not a security, and failing to explain why the agency now considers the asset a security despite requests for clarification.
The firm is seeking relief on four counts, alleging that the SEC has acted in excess of its statutory authority, violated due process, and violated the Administrative Procedure Act (APA).
Earlier this week, the Blockchain Association and the Crypto Freedom Alliance of Texas (CFAT) filed a lawsuit against the SEC over its new definition of the dealer rule, also alleging that the regulator had violated the APA and was attempting to “unlawfully regulate outside its authority.”