Gary Gensler Ethereum Classification Is Now Under Criticism Over Conflicts

Key Points:

• Allegations have surfaced against SEC Chair Gary Gensler, accusing him of misleading Congress about the SEC’s Ethereum classification as a security.
• The lawsuit filed by Consensys suggests that the SEC classified Ether as a security shortly before Gensler’s Congressional testimony.

The Ethereum classification by the SEC has sparked significant controversy, with allegations of deception leveled against SEC Chair Gary Gensler by House Financial Services Committee Chair Patrick McHenry.

SEC Chair Accused of Misleading Congress on Ethereum Classification

McHenry asserts that Gensler knowingly misled Congress regarding the SEC‘s attempts to classify Ether as a security.

McHenry‘s claims stem from a recent court filing by software firm Consensys, which filed a lawsuit against the SEC on April 25. The filing suggests that Gensler intentionally avoided addressing inquiries about Ethereum classification during testimony before the Committee in April of the previous year.

This alleged deception, according to McHenry, underscores the arbitrary nature of the SEC’s regulation of digital assets. It emphasizes the urgent need for bipartisan legislation like the FIT for the 21st Century Act to establish a clear legal framework and protect consumers in the digital asset market.

Controversy Surrounds SEC’s Actions on Digital Asset Classification

Consensys’s lawsuit reveals that the SEC approved an Order on April 13, 2023, classifying Ether as a security, just days before Gensler’s Congressional testimony. This contradicts previous statements by SEC Director William Hinman in 2018, further complicating the SEC’s stance on digital asset classification.

The unredacted lawsuit also suggests that Gensler evaded direct questions from McHenry during the Committee hearing, raising concerns about transparency and accountability within the SEC.

The unfolding controversy highlights the complexities surrounding digital asset regulation and the need for clarity and consistency in regulatory actions.