A court in Texas has dismissed the lawsuit filed by ConsenSys against the US Securities and Exchange Commission (SEC) regarding Ethereum and MetaMask.
ConsenSys who filed the suit in April 2024, accused the SEC of overstepping its authority by investigating Ethereum and claiming that ConsenSys acted unlawfully through its MetaMask services.
“In April 2024, Consensys filed a lawsuit to protect the Ethereum ecosystem from the SEC’s regulatory overreach and stand up for the industry that has been subject to the agency’s reckless enforcement agenda,” Consensys said on its X account.
“Unfortunately, the Texas court today dismissed our lawsuit on procedural grounds without looking at the merits of our claims against the SEC.”
Judge Reed O’Connor ruled that the court did not examine the merits of ConsenSys’s claims, leading to a dismissal on procedural grounds.
ConsenSys, a company specializing in blockchain technology tools and software, primarily focuses on Ethereum, one of the largest cryptocurrencies.
They develop products that facilitate Ethereum usage, such as MetaMask, a digital wallet enabling users to store and manage cryptocurrency and interact with decentralized apps.
In its lawsuit, ConsenSys argued that the SEC’s actions constituted regulatory overreach and sought to challenge the agency’s stance on classifying Ethereum as a security.
However, the court found that the allegations concerning MetaMask were not ripe for adjudication, meaning they were not ready for a legal decision.
“In a significant win for the industry, the SEC dropped its “Ethereum 2.0” investigation after our litigation was filed, and the Texas court today recognized that the SEC already gave Consensys the relief it sought on that critical issue for the Ethereum ecosystem,” ConsenSys stated.
Despite this setback, ConsenSys says it remains committed to contesting the SEC’s enforcement actions related to MetaMask. It stated that, outside of court, there have been signs that Washington’s attitude towards cryptocurrencies and digital assets might be changing in a big way during an important time in U.S. politics. “We are on the right path, but must remain vigilant.”
Over time, the SEC has taken a strict approach toward crypto firms in the U.S. It views many cryptocurrencies as securities, meaning they should be regulated like stocks or bonds.
This has led to investigations, fines, and lawsuits against several crypto companies for allegedly not following U.S. securities laws.
The SEC has also been criticized for not providing clear guidelines for crypto firms, making it hard for them to understand how to comply with the law.
This has created a tense environment between the agency and the crypto industry, with many firms feeling the SEC’s enforcement actions are too aggressive and hinder innovation.
Over a year ago, co-founder of Ethereum, and founder of ConsenSy, Joseph Lubin in an interview stated that Ethereum is a commodity and shouldn’t be treated as a security. When asked about the world of crypto, Web3, and ConsenSys, he stated that Web3 is bigger than crypto. “Web3 isn’t cryptocurrency Casino”, he said.
