The United States Securities and Exchange Commission (SEC) has shared Wells Notice with ConsenSys, the company behind the MetaMask wallet, informing it of possible legal action in regards to its wallet product.
Following the notification, Ethereum infrastructure company, ConsenSys, has filed a lawsuit against the United States Securities and Exchange Commission (SEC) and its Commissioners, arguing that the SEC is unlawfully claiming that Ethereum’s ETH token is a security.
“The U.S. Securities and Exchange Commission seeks to regulate ETH as a security, even though ETH bears none of the attributes of a security – and even though the SEC has previously told the world that ETH is not a security, and not within the SEC’s statutory jurisdiction,” according to the lawsuit filed in a Texas court on 25th April 25 2024.
Today, we sued the #SEC.
They have no right to unplug the U.S. from #Ethereum.
They have no right to prohibit peer-to-peer blockchain software.
Too many Americans – developers, investors, and everyday users – are going to be hurt if they are allowed to continue unopposed.… https://t.co/RxInVS9ZCg
— Bill Hughes : wchughes.eth 🦊 (@BillHughesDC) April 25, 2024
The legal action seeks to prevent the SEC from classifying ETH as a security. According to ConsenSys, such a designation could potentially disrupt the Ethereum network and its operations. It also aims to obtain an injunction to stop the SEC from pursuing legal measures against the MetaMask cryptocurrency wallet that has over 30 million monthly active users.
Consensys’ lawsuit comes after the Securities and Exchange Commission (SEC) sent a Wells Notice to ConsenSys on April 10 2024.
A Wells Notice typically provides recipients with an opportunity to respond to the SEC’s allegations before any formal charges are filed. It serves as a warning that the SEC is considering legal action and allows the recipient to present their arguments or defences to the allegations.
The SEC reportedly believes the MetaMask Swaps and Staking services violate federal security laws because ConsenSys is not a broker-dealer. A broker-dealer is a financial entity registered to trade securities on behalf of clients, but which may also trade for itself.
ConsenSys contends that it merely offers a user interface that facilitates access to other services like decentralized exchanges (DEXs) and staking protocols. Besides ConsenSys, the SEC has issued a Wells Notice to Uniswap, the leading decentralized exchange.
🇺🇸REGULATION | UniSwap Decline Continues Ahead of Potential United States SEC Legal Action
With a market capitalization of $7.6 billion, the $UNI token ranks as the 20th largest cryptocurrency by market cap with UniSwap being the biggest decentralized exchange with a 24-hour… pic.twitter.com/IrvYj1S77Q
— BitKE (@BitcoinKE) April 12, 2024
The Commission issued a Wells notice to the decentralized exchange focused on the exchange acting as an unregistered securities broker and unregistered securities exchange.
The SEC has issued similar notices in the past, warning about legal actions against crypto exchanges Coinbase and Binance. Both exchanges received lawsuits in June 2023.
REGULATION | #Binance Admits to Wrongdoings, to Pay $4 Billion Penalty as Founding CEO Steps Down
The U.S. Federal government also issued a warning to the rest of the cryptocurrency industry.https://t.co/wScRV3EGpb pic.twitter.com/Y4fYBhRmGm
— BitKE (@BitcoinKE) November 22, 2023
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