The United States Securities and Exchange Commission (SEC) has decided to close its investigation into whether Ether (ETH) is a security, a move hailed as a significant victory by Ethereum developer ConsenSys. However, the firm emphasizes that the fight is not over yet.
SEC Closes Ethereum 2.0 Investigation
On June 19, ConsenSys announced via an X post that the SEC's Enforcement Division has officially notified them about the closure of its investigation into Ethereum 2.0. According to ConsenSys, this decision means the SEC will not pursue charges alleging that sales of ETH constitute securities transactions. This development is seen as a major win for Ethereum developers, technology providers, and industry participants.
Background and Implications
The SEC’s decision followed a letter from ConsenSys on June 7, requesting the end of the investigation into Ether. The letter highlighted that the regulator had approved spot Ether exchange-traded funds (ETFs) in May, which the firm argued were based on ETH being classified as a commodity.
ConsenSys' senior counsel, Laura Brookover, shared the SEC’s response letter, which stated that the agency does not intend to recommend enforcement action. Despite the positive outcome, the SEC has yet to comment publicly on the matter.
Previous SEC Actions and Ongoing Legal Battle
The investigation's closure marks a significant turn in the ongoing saga between the SEC and ConsenSys. In March, Fortune reported that the SEC issued subpoenas to multiple companies in an attempt to classify ETH as a security. This led ConsenSys to file a lawsuit against the SEC in April, shortly after receiving a Wells notice warning that its MetaMask crypto wallet might have violated securities laws.
The lawsuit claims that the SEC and its Chair, Gary Gensler, have considered ETH a security since at least early 2023. According to ConsenSys, SEC Division of Enforcement Director Gurbir Grewal approved a formal order of investigation into Ether's status as a security on March 28, 2023.
Conclusion
While the SEC's decision to close its investigation into Ethereum 2.0 is a notable victory for the crypto community, ConsenSys underscores that their legal battle with the SEC is far from over. The lawsuit challenging the SEC's stance on Ethereum continues, indicating that the regulatory environment for cryptocurrencies remains contentious and uncertain.
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