Consensys, a developer at Ethereum, has filed a case against the U.S. SEC, disputing the SEC’s claimed intervention on Ethereum’s ambit prohibited by SEC authorities.
Additionally, Consolia filed a lawsuit seeking a court’s declaration of non-security status of ETH, challenging any regulatory investigation in the name of the alleged security of Ethereum as a violation by Consolia of its constitutional rights, particularly the Fifth Amendment and the Administrative Procedures Act.
Moreover, Consensys argued whether MetaMask, its product, should be classified as a broker in federal law and whether the staking service it offers complies with securities laws.
MetaMask and Regulatory Classification
The aforesaid company is also trying to get a federal judge to prevent the SEC from looking at or instigating any enforcement actions relating to MetaMask’s Swapping or Staking functions.
Among the claims in the Consensys suit against the SEC and its commissioners, information disclosed on 10th April of Consensys having received a Wells notice which is a document indicating that SEC is to file suit against Consensys over suspected breaching securities law in relation to MetaMask’s wallet.
The line between a ConsenSys wallet and a brokerage service is supposed to be clear, with ConsenSys positioning its wallet as an interface, not a platform that takes digital assets in custody and executes transactions.
In the complaint SEC states that the authority of regulating Ethereum by SEC when it has previously said that Ethereum is a commodity not a security and recently at his 2018 conference director of SEC William Hinman said that Ethereum is not a security is contradicting by SEC.
CFTC’s Control Over Ethereum Derivatives
ConsenSys also spotlights the Commodities Futures Trading Commission’s its control over Ethereum derivative products which is other evidence supporting the dogmatism of Ethereum as a commodity also.
Consensys states that its activities comply with the general regulatory background but the recent SEC actions came as a surprise and appear to be lawmaking under the guise of enforcement which is why Consensys considers them a violation of due process.
The complaint concerning the application of SEC to the Ethereum protocol and Consensys is an alert that it might have damaging consequences to the operation of Ethereum network and Consensys. Yet, it claims that the major question doctrine is applicable to the policy since federal authorities should not overreaching the confinements of the Congressional power.
Legal Precedents in Crypto Assets
Nevertheless, the history of judicial decisions in this sector proved to be hard for the application of latin maxim in crypto assets area.
Consensys sued the SEC in a federal court located in the Northern District of Texas along other entities including the Blockchain and Legit Exchange Association in fighting of the SEC’s actions.
Obviously, a couple of crypto platforms, for example Binance.US, Binance, and Kraken, have faced SEC action as Uniswap too admitted that they have a notice letter from SEC.
