MetaMask developer Consensys has asked a Texas federal court to declare that Ethereum is not a security, pending a backlash against the SEC’s sweeping enforcement action.
Consensys has filed a lawsuit against the U.S. SEC, challenging the agency’s unlawful attempt to restructure its constitutional powers to include oversight of Ethereum (ETH), the second-largest decentralized network of cryptocurrencies.
According to the blockchain developer, the SEC has adopted a “reckless approach” that mislabeled ETH as a security and would stifle innovation if left unchecked.
“We have now seen the SEC contradict its ever-changing view of blockchain time and time again, consistently mischaracterizing this technology and what it is built on as a shallow, doomed investment scheme rather than a groundbreaking technology.”
Consensis SEC Litigation Announcement
The 34-page legal document released on April 25 argued that the SEC’s enforcement could undo the work accomplished by Congress on stablecoin policy and promote technological advancement outside U.S. borders.
Consensys said this “aggressive SEC regulatory overreach” extends beyond U.S. capital markets and is counterproductive to the watchdog’s original mission.
ConsenSys fights back
The MetaMask founder’s complaint comes as the SEC is seeking an additional $158 million to step up its litigation efforts against the cryptocurrency industry and keep the “West” digital asset ecosystem at gunpoint.
Moreover, the lawsuit is in response to a Wells notice issued against Consensys earlier this month, suggesting that MetaMask could face charges of operating as an unregistered broker-dealer entity.
The industry is also coming together to fight investigations into the Ethereum Foundation, a non-profit organization dedicated to improving the ETH ecosystem. As crypto.news reported last month, several companies and corporations have received unsolicited inquiries from anonymous state authorities.
After being charged with federal violations, stakeholders such as Coinbase and Kraken are fighting Wall Street securities regulators in court. Industry advocates like Hester Peirce and opposing SEC members also argue that the agency has not provided clear rules for the nascent cryptocurrency market.