SEC Closes Probe into Consensys’ Ethereum Dealings

News | July 4, 2024 By:

On Tuesday, June 18, 2024, Ethereum-focused software firm Consensys said it received a communication from the U.S. Securities and Exchange Commission’s (SEC) Division of Enforcement closing its investigation into the firm’s dealings in Ethereum. However, Consensys’ preemptive lawsuit against the SEC seeking clarity on other products is still ongoing.

In a post on social media site X, Consensys said the SEC notice stated that the enforcement division had “concluded the investigation” into Ethereum and did not intend to recommend charges related to sales of ether “based on the information we have as of this date.” However, the notice asserted it did not indicate agreement with any statements or conclusions from Consensys.

The investigation closure follows a June 7 letter from Consensys asking the SEC to confirm the closure in light of Ethereum exchange-traded products approved by the SEC’s Division of Trading and Markets at the end of May. Those approvals treated ether as a commodity, implying it fell outside SEC jurisdiction. Nevertheless, the SEC has made no formal statement on its regulatory stance toward ether.

Consensys filed a proactive lawsuit against the SEC in April seeking to preempt potential enforcement action over its ether transactions and products like its MetaMask wallet, swaps interface, and staking products. The firm argued these were interfaces to interact with Ethereum protocols, not brokerage services requiring registration.

While the closure ends the investigation into ether, the SEC notice did not address Consensys’ other products. As a result, Consensys says its lawsuit will continue to seek clarity on whether interfaces like MetaMask Swaps and Staking violate securities laws.