Blockchain Firm Consensys Objects to SEC’s Attempt to Dismiss MetaMask Lawsuit

On Friday, August 16, 2024, blockchain firm Consensys responded to the SEC’s motion to dismiss the remaining count in its lawsuit against the agency regarding its MetaMask software.

Consensys, which is headquartered in Fort Worth, Texas, and develops blockchain software, filed a lawsuit against the SEC in April seeking declaratory and injunctive relief over the agency’s investigations into the firm’s transactions of Ether and its popular MetaMask wallet software. Since then, the lawsuit has narrowed to focus solely on MetaMask after the SEC terminated its investigation into Consensys and Ether.

In its response, Consensys argued that the court has jurisdiction over the remaining MetaMask count and the motion to dismiss should be denied. It pointed to case law that has established sovereign immunity is waived under the Administrative Procedure Act when a plaintiff seeks non-monetary relief and has been adversely affected by an agency action. Consensys argued both criteria are met since it is challenging SEC actions like a Wells notice threatening an enforcement action against the firm over MetaMask as well as a similar case the agency brought against cryptocurrency exchange Coinbase.

Consensys also claimed the MetaMask count is ripe for adjudication, as the issues are fit for judicial decision. It involves the SEC’s position that federal securities laws apply to the MetaMask software, about which there are no disputed facts. Further, Consensys said it continues to face uncertainty harming its business if the question isn’t resolved promptly.

The response urged the court to deny the SEC’s motion to dismiss or transfer the case to New York, where the agency later filed an enforcement action against Consensys during the lawsuit. It pointed out the current lawsuit was filed first and Consensys has a strong interest in adjudicating fundamental threats to its business in its headquarters district. Discovery was also already complete according to the court’s schedule.

The SEC’s motion and Consensys’s response come after months of litigation activity, including the completion of targeted discovery by both sides. The court is slated to receive briefs for any dispositive motions in the case later next month, based on its prior scheduling order. The response aims to keep the remaining MetaMask issue on track for adjudication in the Northern District of Texas.

Please contact BlockTribune for access to a copy of this filing.