Consensys Sues the SEC to Defend the U.S. Ethereum Community

The U.S. Securities and Exchange Commission’s (SEC) threatened regulation of ether (ETH) as a security would jeopardize the United States’ ability to use Ethereum and similar blockchain technology. The implications would stretch far beyond digital asset trading, jeopardizing the future of countless new innovations, products and U.S. jobs that this next generation of the Internet will unleash.

That’s why we’ve taken the necessary step of suing the SEC, to stop its unlawful power grab. At its core, our litigation highlights several critical facts:

  • Ethereum is a global computing platform, not an investment scheme.  Ether is not a security. It is a commodity, as repeatedly confirmed by the Commodity Futures & Trading Commission (CFTC).

  • The applications that allow people to transact on their own using Ethereum are not securities brokers, and therefore cannot be regulated by the SEC.

  • The SEC’s unlawful power grab threatens to undermine America’s position as a leader of the next generation of the internet. This opens the door for other countries, particularly hostile foreign adversaries, to control the development of an economy built off of a technological evolution of the internet. This is not what our country should want for its technology industry, yet it is where the SEC is leading us.

"We don’t take this step lightly, but we feel compelled to act. <br />Ethereum is for everyone."

"We don’t take this step lightly, but we feel compelled to act.
Ethereum is for everyone."


Latest Posts

Blog Post from Joe Lubin: Consensys is suing the SEC to defend the Ethereum ecosystem

Today, Consensys took an important step towards preserving access to the Ethereum blockchain, and by extension, permissionless innovation.

Consensys was founded on an era-defining mission: to empower people and communities through access to blockchain technologies. We believe that advancing adoption of blockchain platforms like Ethereum will help reshape and enhance how future generations will manage economic, financial, social, political, and technological systems, creating a more equitable, transparent and innovative world.

Guided by our mission, Consensys took an important step towards preserving access to the Ethereum blockchain today, and by extension, permissionless innovation. We filed litigation against the U.S. Securities and Exchange Commission (SEC).

Blog Post from Joe Lubin: Consensys is suing the SEC to defend the Ethereum ecosystem
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Company Statement: On the SEC approval of ETH Spot ETFs

While Consensys welcomes today’s decision to approve ETH Spot ETFs as a step in the right direction, this seemingly last minute approval is yet another example of the SEC’s troublesome ad hoc approach to digital assets. No other industry, market, or asset is subject to such deliberate regulatory abuse. It is unfair to market participants, antithetical to the rule of law, and handcuffing innovation.

Today’s approval signals that the SEC views that ETH is a commodity and not a security - contrary to the position it continued to take prior to the events of this week, as described in our recent lawsuit against the SEC. We will continue to fight for definitive regulatory clarity in our case and we are pleased to see the tremendous bipartisan Congressional effort seeking to provide clear and sensible regulation.

Company Statement: On the SEC approval of ETH Spot ETFs
Company Statement: SEC Closes Ethereum 2.0 Investigation, Will Not Pursue Ethereum Enforcement Action

Today, we would like to announce a major win for Ethereum developers, technology providers, and industry participants who have suffered as a result of the Securities and Exchange Commission’s regulatory overreach and inconsistent positions on Ethereum. After declaring in 2018 that Ether is not a security, in 2023 the SEC secretly decided to claim power over this digital asset as a security and has been conducting an invalid investigation into Ethereum. Consensys sued the SEC on April 25, 2024 to defend the Ethereum ecosystem, seeking a court order that would halt the SEC’s investigation, on the grounds that ETH is a commodity and therefore the SEC lacks jurisdiction to investigate or regulate it. Following our lawsuit, numerous policymakers–including members of Congress–and the public at large voiced concern over the SEC’s Ethereum 2.0 investigation. On June 7, we sent a letter asking the SEC to confirm that the ETH ETF approvals in May, which were predicated on ether being a commodity, meant the agency would close its Ethereum 2.0 investigation.

Company Statement: SEC Closes Ethereum 2.0 Investigation, Will Not Pursue Ethereum Enforcement Action
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Why We’re Suing the SEC

Why We’re Suing the SEC

  • The SEC has no authority—nor should it—to regulate global, peer-to-peer computer networks. The SEC’s aggressive overreach into commodities, software, and these novel technology platforms is unlawful.

  • The SEC insists that Ethereum, a decentralized network that allows people to control their own finances, identity, and information, must be centralized and beholden to the SEC or not be accessible to the U.S at all. Its position and resulting actions undermine the global Ethereum system and negatively impact developers, market participants, the state of Texas and the U.S. at large.

  • The SEC is currently reframing its authority, by redefining legal standards and even everyday language, in order to claim oversight of the Ethereum computer programming ecosystem.

  • If the SEC has its way, then all the work that Congress and other agencies such as the Federal Reserve and Treasury have done on stablecoins is effectively dead, thereby destroying a well-established U.S policy priority and giving the advantage in technological advancement to countries outside of the U.S.

  • This is just the latest example of aggressive SEC regulatory overreach into sectors far beyond U.S. capital markets: the SEC has decided to regulate environmental policy and corporate governance (boards of directors), and now wants to regulate the technological evolution of the Internet.

  • As of July 2023, the cryptocurrency industry includes 190,000 direct employees, with 29% of them based in the U.S. If the SEC succeeds in designating ether as a security, companies and developers would see years of work squandered and billions of dollars of economic value destroyed that could potentially lead to widespread layoffs of American workers.

About Consensys and Our Beliefs

About Consensys and Our Beliefs

  • Consensys believes Ethereum is the strongest tool we have to create a decentralized, permissionless, and highly secure system upon which the future of technology industry – and of humanity – can develop and thrive.

  • To achieve this, we want a properly regulated crypto ecosystem that is imbued with U.S. ingenuity, talent, and values – including the freedom to build something better than the systems we currently have in place.

  • We are headquartered in Fort Worth and deeply value our home in Texas, a state that has welcomed the blockchain industry in its mission to innovate and disrupt for the better. We do not want to see the SEC’s actions jeopardize the thriving tech community in the state.

  • Our litigation against the SEC is intended to defend the entire Ethereum ecosystem, including intermediaries and developers, from overzealous interference with their software development work.

  • Ether is, and should continue to be, available across a broad range of non-financial applications relevant to sectors such as media, entertainment, social media, healthcare, energy, transport, and agriculture, among others. It not only democratizes access to financial services through decentralized finance, but it shifts control back to the user by putting them in charge of their digital data and identity. For all these reasons and more, ether is not a security.

  • Consensys is dedicated to ensuring a bright future for the crypto industry and the U.S., while supporting builders of the new web around the globe.

Recent press

Industry Voices

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“Blockchain Association – and the entire digital asset ecosystem – stands shoulder to shoulder with Consensys as they take the fight to the SEC, challenging the Commission’s ever-expanding overreach and aggression... This critical battle impacts all aspects of the digital asset industry. We fully support Consensys in their decision to file preemptive legal action to stop the SEC’s illegal onslaught targeting emerging technologies such as public blockchains."

- The Blockchain Association

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We stand with Texas based member company @Consensys for challenging the SEC against their un-American & unlawful approach towards the entire digital asset industry.

We FIRMLY support @Consensys & we’re proud to stand behind those who fight for our industry.

– Texas Blockchain Council

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Sue the Exchange Commission

Thanks @ethereumJoseph and @Consensys for fighting back and defending our industry

We're tired of the overreach and harassment

- Hayden Adams, Founder and CEO of Uniswap

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I know ETH is a commodity. You know ETH is a commodity. The CFTC knows ETH is a commodity. It's time for the SEC to admit that it still knows ETH is a commodity too. No more games. Thank you to @Consensys for standing up against the SEC's unlawful expansion of authority.

– Paul Grewal, Chief Legal Officer of Coinbase

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"This Consensys lawsuit is a really big deal. They’re positioning themselves to challenge the SEC’s authority to regulate crypto.”

Brian L. Frye, Law Professor, University of Kentucky

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"The evidence clearly shows that ethereum is a decentralized commodity, not a security," "ETH’s status as a commodity has now been recognized in a variety of circumstances, including the CFTC's regulation of ETH futures, public statements by commission officials, rulings by federal courts, and now, hopefully, this ETF."

– Matthew Sigel, Head of Digital Asset Research, VanEck

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"We are proud to stand with @TXblockchain_ Council member company @Consensys as they push back against the SEC's attack on peer-to-peer blockchain tech and self-custody. What the SEC has done over the past several years is un-American and is pushing innovation overseas."

– Lee Bratcher, President and Founder of the Texas Blockchain Council

Stay Connected on this Issue


Why do you feel the SEC is in the wrong?
Surely, they should regulate any new publicly traded asset classes.

The SEC has no jurisdiction to regulate ether. The SEC’s regulatory powers are limited to securities, not commodities. Ether is a commodity, as confirmed by the CFTC, and the Ethereum blockchain is an internet protocol, not an investment scheme. As recently as October 2023, the SEC endorsed the CFTC’s classification of ether as a commodity by green-lighting ether ETFs tied to commodity futures that are regulated by the CFTC. This action by the SEC not only underscores the legal status of these ether futures contracts but also affirms ether’s standing as a commodity, aligning with the CFTC’s view. While ether is a commodity in which one can invest (like oil), it has far broader technological applications relating to the Ethereum blockchain.

The problem is, although the SEC affirmed the CFTC’s view of ether by publicly approving the ETFs in October 2023, in private the SEC has secretly been building an enforcement action to assert that ether is a security. It is taking two completely contradictory positions.

Furthermore, the SEC has also been covertly building a case to shut down applications that people around the globe rely upon to access and use the Ethereum blockchain – such as our MetaMask wallet. We aim to show that MetaMask is not a securities intermediary (i.e., a broker).

The facts are clear, the SEC has no jurisdiction to regulate Ether (a commodity), software interfaces built on Ethereum, or the Ethereum blockchain in general. Its attempt to do so is just the latest case of aggressive regulatory overreach by the agency, with the SEC trying to impose its own politicized agenda onto sectors far beyond U.S. capital markets.

What makes this case unique? Is the SEC not examining several crypto intermediaries?

This case is a response to a pattern of unwarranted SEC’s scrutiny of Consensys and its offering, but it does highlight broader SEC action that we feel showcases a clear ideological war on crypto.

In February of this year, Lejilex and the Crypto Freedom Alliance of Texas brought a complaint against the SEC on grounds of gross regulatory overreach. And in March, the DeFi Education Fund joined with Beba in a case against the SEC that, amongst other complaints, challenged the SEC’s “unwritten policy” on crypto rules as a violation of the Administrative Procedure Act. The case Consensys brings is the first to address the status of ether; this is a critically important component as ether has the potential to be a significant driver of the U.S. economy of the future. Unlawful SEC regulation, however, threatens to jeopardize this potential and impede the U.S.’s ability to use blockchain technology as the basis for countless new innovations and technologies.

The sector has had enough of the SEC’s aggressive regulatory overreach, and we are pleased to join others in standing up for the industry, other enterprises, and what is right.

Is this case about ether’s status as a commodity vs a security?

Our complaint is about the SEC’s gross regulatory overreach when it comes to interfering with the cryptocurrency and digital asset space. But ether’s status is a core component of the case. While long taking the position publicly that ether is a commodity, the SEC has secretly been targeting blockchain companies, including Consensys, and software developers in an investigation focused on Ethereum. It’s an abuse of power for a financial regulator to use its investigatory powers to mount an attack on technology, and we need the judicial branch to compel this rogue agency to follow the law.

The CFTC recognizes ether as a commodity, a stance the SEC validated as recently as October 2023. And given ether is a commodity, the applications that people around the globe rely upon to access and use the Ethereum blockchain – such as our MetaMask wallet – are not securities intermediaries (brokers).

Therefore, the SEC has no jurisdiction to regulate ether (a commodity), software interfaces built on Ethereum, or the Ethereum blockchain in general.

SEC regulation of Ethereum would jeopardize the U.S.’ ability to use blockchain technology as the basis for countless new innovations, technologies, and products that this next generation of the Internet will unleash.

What is your desired outcome from this litigation?

Consensys’ lawsuit seeks a declaration that (i) ether is not a security and that, accordingly, the SEC’s investigation into ether and Ethereum and any resulting enforcement actions exceed its regulatory authority; (ii) any enforcement action against Consensys premised on ether being a security or ether transactions being securities transactions would violate due process and fair notice; (iii) Consensys neither acts as a broker nor offers or sells securities through the Swaps and Staking functionality of its MetaMask wallet software; and (iv) any investigation or enforcement action against Consensys premised on it acting as a broker or offering and selling securities through its MetaMask software would exceed the SEC’s authority. Consensys further seeks an order enjoining the SEC from continuing to investigate or bringing an enforcement action with respect to its sales of ether and as to MetaMask.

How are regulators, in other international markets, approaching this matter?

The U.S. has been a standard-bearer for technological innovation and regulation since the breakout of the internet in the 1990s. Through its illegal overreach, the SEC risks destroying America’s position as a global technological leader by essentially ceding to foreign states the opportunity to use blockchain to contribute to an economy built off of a technological evolution of the internet.

Other regulators around the globe are approaching crypto and blockchain innovation in a far more pragmatic and optimistic manner than the U.S. BRICS countries are trying to move away from the Dollar by creating a new blockchain-based payment system and, in June 2023, the European Commission published a draft legislative proposal to develop a digital euro—potentially based on blockchain—as the eurozone central bank’s digital currency. On April 15, it was announced that Hong Kong regulators approved the launch of spot bitcoin and ether exchange-traded funds (ETFs).

Crypto Regulations

Learn more


Our comment letter to the SEC on ETH ETF approval: “We urge the Commission to recognize the advanced safeguards inherent in Ethereum’s design”

March 29, 2024

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Consensys Addresses the SEC to highlight flaws in its proposal to categorize blockchain protocols as securities exchanges

June 14, 2023

Money Crypto Versus Tech Crypto

Money Crypto Versus Tech Crypto

November 7, 2022

REVEALED! The SEC's Big Plan to Classify Ethereum as a Security & Block the ETH Spot ETF!

REVEALED! The SEC's Big Plan to Classify Ethereum as a Security & Block the ETH Spot ETF!

April 19, 2024