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Ethereum developer Consensys has filed a lawsuit against the US Securities and Exchange Commission (SEC), pushing back against what it calls an “illegal usurpation” of authority over Ethereum by the federal regulator.
The company responded that a federal court had declared that ETH was not a security, that any ConsenSys investigation based on the notion that ETH was considered a security would violate the company’s Fifth Amendment rights and the Administrative Procedures Act, and that MetaMask is not an intermediary under federal law. , claims that MetaMask’s staking service does not violate securities law and is seeking an interim injunction preventing the SEC from investigating or taking legal action regarding MetaMask’s Swapping or Staking functions.
In the complaint filed against the SEC and its five commissioners on Thursday, Consensys revealed that the SEC received a notice from Wells on April 10 informing the company of its intent to violate securities laws through its MetaMask wallet product. Consensys denies acting as an intermediary, claiming the wallet is “merely an interface” and “does not hold customers’ digital assets or perform any transaction functions.”
The complaint also cites the SEC’s increased authority over Ethereum, citing its own past statements that the cryptocurrency is a commodity, not a security (referencing former director Bill Hinman’s 2018 speech), and the Commodity Futures Trading Commission, which oversees derivatives tied to Ethereum. It is stated that it is against the authority of the CFTC.
In its filing, Consensys argues that the company “has built its business against this backdrop of regulatory consensus” and that the SEC’s new usurpation of authority over Ethereum—which it calls “a spin”—“would violate the fair notice requirement under the Constitution’s due process clause.”
“The regulator’s illegal usurpation of authority over ETH would be disastrous for the Ethereum network and Consensys,” the lawsuit claims.
The case also relies on the “big questions doctrine,” a Supreme Court ruling that bars federal regulators from dramatically exceeding the scope of Congressional mandates. In arguments brought by Terraform Labs, two judges have already ruled out that crypto would not fall under this doctrine.
ConsenSys filed its brief in the Federal Court for the District of North Texas, along with groups like the Blockchain Association and companies like Legit Exchange, which have been involved in similar preemptive lawsuits aimed at preventing the SEC from treating certain crypto companies or assets as securities.
In recent months, the SEC has also filed lawsuits against crypto exchanges such as Binance.US, Binance, and Kraken. Uniswap Labs announced earlier this month that it had received a Wells Notice from the regulator.
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