The lawsuit filed by Consensys against the U.S. Securities and Exchange Commission (SEC) regarding Ethereum and MetaMask has been dismissed by federal Judge Reed O’Connor. Consensys had sought a court ruling to declare Ethereum as not a security and to block potential SEC enforcement actions related to its MetaMask wallet services. However, the judge dismissed the case due to a lack of subject matter jurisdiction, ruling in favor of the SEC and ending the months-long legal battle.
Consensys originally filed the lawsuit in April in the U.S. District Court for the Northern District of Texas, naming the SEC, its chairman Gary Gensler, and five commissioners. The company accused the SEC of overstepping its authority by treating Ethereum as a security and threatened the entire Ethereum ecosystem with its regulatory actions. The suit was prompted by a Wells notice from the SEC, which Consensys interpreted as a precursor to enforcement actions against MetaMask’s staking and swap services.
Federal Judge Dismisses Consensys Lawsuit Against SEC Over Ethereum and MetaMask
Judge O’Connor’s ruling emphasized that a Wells notice does not represent the final decision of the SEC nor does it impose any legal obligations or consequences on Consensys. He pointed out that the notice alone does not warrant a judicial review as it does not define the plaintiff’s legal rights. Additionally, he noted that the SEC had dropped its investigation into Ethereum’s classification as a security following the approval of Ethereum ETFs in May.
While the judge dismissed Consensys’s claims regarding Ethereum, the company saw the SEC’s dropped probe into Ethereum as a victory for the cryptocurrency industry. However, Consensys stated that it would continue pursuing legal action to clarify that MetaMask’s staking and swap services do not violate U.S. securities laws. The company’s focus shifted towards defending MetaMask from further regulatory scrutiny.
Following the dismissal of the lawsuit in Texas, Consensys plans to contest the SEC’s MetaMask claims in the U.S. District Court for the Eastern District of New York, where the SEC has filed a separate suit accusing the company of operating MetaMask as an unregistered broker. Consensys expressed disappointment that the Texas court dismissed their claims on procedural grounds and reaffirmed its commitment to defending blockchain developers’ rights against the SEC’s regulatory actions.
