Reporter
Published:
- A judge dismissed Consensys’ lawsuit against the SEC, citing a lack of conclusive agency action.
- Consensys committed to continue contesting the SEC’s regulatory approach towards Ethereum and blockchain developers.
In an unexpected legal turn, a federal judge in Texas has dismissed a lawsuit brought by blockchain company Consensys against the SEC, which also named its commissioners, including Chairman Gary Gensler.
Insights into Consensys’ lawsuit
The lawsuit, filed in April in the Northern District of Texas, claimed that the SEC was trying to dominate the cryptocurrency sector with aggressive enforcement measures.
The firm contended that the SEC’s focus on classifying Ethereum [ETH] as a security contradicted previous statements, highlighting that as far back as 2018, ETH had been determined not to be a security.
They also accused the SEC of initiating an investigation into Ethereum, indicating its plan to regulate the asset.
Additionally, the firm brought attention to a Wells notice from the SEC concerning MetaMask’s swap and staking functionalities, which raised concerns about a potential regulatory shift.
Why Judge O’Connor dismissed the lawsuit?
On September 19, Judge Reed O’Connor rejected Consensys’ claims regarding MetaMask, asserting that “enforcement actions are not regarded as final agency actions.”
He elaborated,
“As the Plaintiff has not pinpointed any final agency action that would render the claim appropriate for judicial review, and because delaying consideration results in minimal, if any, hardship for the Plaintiff, the claim lacks a ripe case or controversy.”
Furthermore, Judge O’Connor indicated that the Wells notice issued by the SEC does not mark the end of the agency’s decision-making process or clarify the legal rights or obligations of the plaintiff.
He underscored that it does not impose any legal ramifications on Consensys.
Moreover, Judge O’Connor dismissed the claims by Consensys regarding the SEC’s inquiry into Ethereum.
He considered these claims “moot” after the firm disclosed in July that the SEC had halted its investigation following the approval of Ether exchange-traded funds (ETFs) in May.
Consensys voices its dissatisfaction
In the wake of the ruling, Consensys expressed its response on X (formerly Twitter), stating:
“Regrettably, the Texas court dismissed our lawsuit today on procedural grounds without addressing the merits of our claims against the SEC.”
The company claimed that its lawsuit against the SEC revealed what they perceived as an excessive investigation into Ethereum.
They had previously celebrated the SEC’s decision to drop its “Ethereum 2.0” investigation as a significant win for the sector, viewing it as an acknowledgment by the Texas court that the relief sought by the company had been achieved.
In addition, they noted a possible shift in Washington’s approach towards cryptocurrencies and digital assets, indicating a positive development during a critical phase for U.S. politics.
In light of this unforeseen outcome, the company reaffirmed its determination by stating,
“Consensys is committed to advocating for the rights of blockchain developers in the U.S. as we challenge the SEC’s actions in Brooklyn.”
Thus, it remains to be determined whether Consensys will proceed by filing a motion to dismiss the case or continue contesting the SEC.
