Consensys Persists in Fight as SEC Concludes Ether 2.0 Case

June 20, 2024 at 12:58 PM GST updated: June 20, 2024 at 12:59 PM 2 mins read News

SEC closes Ethereum 2.0 probe, removing immediate legal threat.
Consensys battles SEC over Metamask’s legality, pushing for regulatory clarity.
Attorney Rispoli warns of unresolved issues despite SEC’s Ethereum investigation closure.

The SEC recently closed its investigation into Ethereum 2.0 without recommending enforcement action. This decision removed the immediate threat of civil fines and criminal charges. However, attorney Fred Rispoli emphasised that significant issues remain unresolved.

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Consensys, an Ethereum developer, disclosed that its legal battle with the SEC continues, particularly regarding its Metamask crypto wallet’s staking and swap services.

Our fight continues. In our lawsuit, we also seek a declaration that offering the user interface software MetaMask Swaps and Staking does not violate the securities laws. It should not take a lawsuit to provide the much-needed regulatory clarity to allow an industry that serves…
— Consensys (@Consensys) June 19, 2024

Consensys’ Legal Actions

In March, the Consensys received a subpoena from the SEC concerning the violation of the securities laws through the Metamask services. In return, Consensys filed a lawsuit against the SEC in April that required the Texas District Court to make a ruling that Metamask’s offering did not fall under securities law violation.

Despite the SEC’s silence on the status of these services, Consensys maintains its fight, advocating for regulatory clarity to foster innovation. They stressed that achieving this clarity should not require litigation, especially for services critical to their platform.

Attorney Rispoli’s Insights

Attorney Rispoli commented that the lawsuit over Metamask’s services addresses the same concerns as the SEC’s potential enforcement actions. The key differences are the parties’ positions and the burden of proof.

…enforcement action are the same case, the only differences are the burden of proof- and position-switches of the parties. I did think SEC would seek to dismiss the TX case and file its enforcement suit in a favorable jurisdiction, but this seems highly unlikely now. 2/4
— Fred Rispoli (@freddyriz) June 19, 2024

Rispoli predicted that the SEC might try to dismiss the Texas case and refile an enforcement action in a favourable jurisdiction. However, this seems unlikely given the SEC’s closure of its investigation into Ethereum 2.0.

Potential Implications for Ethereum

Rispoli suggested that the lawsuit’s outcome could reveal the SEC’s true stance on Ethereum. If Consensys dismisses the lawsuit, the situation will remain unchanged from before the SEC’s investigation.

Conversely, if the lawsuit continues, the core issues will still be litigated without the threat of fines and potential jail time that an SEC enforcement action might entail.