As a long-time observer and participant in the blockchain and web3 space, I strongly support Consensys’ decision to file a lawsuit against the Securities and Exchange Commission (SEC). The SEC’s recent actions towards regulating Ethereum through ad hoc enforcement measures against companies like Consensys is not only illegal but also detrimental to the entire blockchain ecosystem.
Consensys, known for being the frontrunner in web3 and blockchain technology, has initiated a legal action against the Securities and Exchange Commission (SEC) and its five commissioners. The company accuses the SEC of exceeding its legal bounds with their perceived takeover of Ethereum‘s regulatory oversight.
Today, I observe Consensys taking legal action against the Securities and Exchange Commission. The intent behind this move is twofold: firstly, to protect Ethereum’s status as a thriving and essential blockchain platform; secondly, to safeguard unhindered access for the multitude of developers, market participants, and institutions that contribute to its success.
— Consensys (@Consensys) April 25, 2024
The complaint outlines the most recent instances of forceful and illegal overreach of the SEC, as it attempts to regulate ether via ad hoc enforcement measures against Consensys and maybe other parties.
The company is asking for a federal court ruling to confirm that Ethereum (ETH) does not fall under the definition of a security. Simultaneously, any probe into ConsenSys, founded on the belief that ETH is a security, could infringe upon the company’s Fifth Amendment protections and the Administrative Procedures Act.
The firm argues that MetaMask falls outside the definition of a broker under federal law and maintains that its staking feature adheres to securities regulations. Subsequently, the company asks the court for an order prohibiting the SEC from probing or taking enforcement steps concerning MetaMask’s Swaps and Staking capabilities.
The SEC notified ConsenSys on April 10 of their intent to take enforcement action against the company, as they suspected that ConsenSys had violated securities regulations through its MetaMask wallet service.
Consensys disputes allegations that it acts as a broker by explaining that the wallet is merely an “interface” and holds no customer digital assets or executes transactions. In simpler terms, Consensys doesn’t keep or manage your digital assets and doesn’t process transactions on your behalf.
Furthermore, the grievance points out that the SEC’s expanding influence over Ethereum goes against its past statements regarding Ethereum being classified as a commodity instead of a security.
As an observer, I’d put it this way: I’ve learned that the Commodities Futures Trading Commission (CFTC) shares regulatory responsibilities with the Securities and Exchange Commission (SEC) when it comes to Ethereum. Specifically, CFTC is in charge of overseeing derivative products associated with Ethereum.
Consensys contends in its lawsuit that, having established its business within the existing regulatory framework, the SEC’s sudden effort to assert dominion over Ethereum would constitute a breach of the Constitutional mandate for “fair warning” under the Due Process Clause. Consensys describes this shift as an unexpected reversal.
I’ve observed a legal dispute where the Ethereum network and Consensys are alleged to be negatively impacted by the SEC’s unlawful seizure of control over Ether (ETH). The “major questions doctrine,” a landmark Supreme Court ruling, is invoked in this case. This principle prevents federal regulators from significantly exceeding the boundaries set by Congress in their regulatory authority.
At two recent hearings involving Terraform Labs and Coinbase, two judges have previously dismissed the idea that cryptocurrencies fall under the definition of the concept in question.
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2024-04-25 23:33