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ConsenSys SEC Lawsuit Dismissed by Court

Key Points:

Texas court dismissed ConsenSys SEC lawsuit, ruling that the agency’s enforcement actions do not constitute final agency decisions.
The court deemed claims regarding Ethereum moot, as the SEC had dropped its investigation after approving Ether ETFs earlier this summer.

A Texas court has tossed out the ConsenSys lawsuit against the U.S. Securities and Exchange Commission and Chairman Gary Gensler.

Texas Court Tosses ConsenSys SEC Lawsuit

The ConsenSys SEC lawsuit filed in April 2023 accused the SEC of investigating Ethereum and issued a Wells notice to ConsenSys, warning of potential enforcement actions related to MetaMask’s swap and staking products.

The suit was seeking a court ruling that Ether is not a security and the sales of Ethereum are not securities transactions, but also to stop the SEC from taking any enforcement actions against the MetaMask software.

On September 19, Judge Reed O’Connor dismissed the ConsenSys claims over MetaMask on the basis that “enforcement actions do not constitute final agency actions.” As observed by Judge O’Connor, the Wells notice is not the last word on behalf of the SEC, nor does it establish any legal rights to ConsenSys or impose on it any of its legal consequences.

The court also considered ConsenSys’ claims about Ethereum moot because the SEC already closed its investigation of ETH earlier this summer. That decision came after the SEC approved Ether ETFs in May, which rendered the initial concerns irrelevant.

ConsenSys to Continue Fighting Separate SEC Charges

Despite this setback, ConsenSys said it would continue its lawsuit against a second SEC complaint back in June. The latter ConsenSys SEC lawsuits accused the company of operating as an unregistered brokerage offering unregistered securities through MetaMask Swaps.

ConsenSys has criticized the SEC over what the agency called an anti-crypto agenda, citing how efforts by the agency to use enforcement actions to rewrite clear and longstanding legal standards to expand its regulatory reach.

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Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.