Initial SEC Investigation of Ether as a Security
The United States Securities and Exchange Commission (SEC) and its Chair Gary Gensler were reported to have investigated Ether (ETH) as a security for a period lasting up to a year. This revelation came to light through findings on a Monday, with Consensys Software Inc. lodging a complaint. The SEC Director of Enforcement, Gurbir Grewal, initiated an investigation into “Ethereum 2.0” on March 28, 2023, focusing on potential securities violations related to offerings and sales, including ETH, dating back to at least 2018.
The SEC’s examination of ETH’s security status contrasts with its prior approval of ETH Future ETFs in October 2023. Gensler, known for maintaining silence on ETH classification, has faced criticism for the SEC’s enforcement-oriented regulatory stance.
Consensys’ Response and Legal Action
Amidst the SEC’s scrutiny, Consensys filed a lawsuit against the commission challenging its attempts to regulate ETH as a security. Consensys Founder, Joe Lubin, emphasized that the SEC’s expansion of authority to govern the internet’s future is unwarranted. Lubin argues that the SEC’s actions are causing disruption within the Ethereum ecosystem, impacting developers, institutions, and nations relying on Ethereum.
Furthermore, reports indicated that various organizations associated with the Ethereum Foundation were subpoenaed for information by regulatory authorities. In a separate incident, the foundation confirmed contact with an undisclosed state authority through a GitHub post. As legal tensions escalate, Consensys received a Wells notice on April 10, suggesting impending legal actions from the SEC.
