Consensys Faces Setback as U.S. District Court Dismisses Lawsuit Challenging SEC’s Ethereum Classification

• Consensys’ lawsuit against the SEC was dismissed due to lack of final agency action, rendering the claims moot.  
• The SEC previously issued a Wells notice to Consensys regarding its MetaMask wallet’s potential securities violations.  
• The dismissal does not end the regulatory scrutiny, as the SEC continues to investigate other crypto companies.

The case that Consensys had filed against the Securities and Exchange Commission was dismissed by a U.S. district judge. The Ethereum software firm filed a lawsuit to challenge the SEC’s position on Ethereum’s legal standing. The court decided that Consensys’ allegations were moot because the agency had not taken any final action.

Judge Reed O’Connor stated that the claims were not appropriate for judicial review. He added that Consensys had not provided any final SEC ruling that could be contested. As a result, the matter was unable to proceed in court. This decision is significant in the ongoing case regarding Ethereum’s classification under US law.

Consensys Filed Lawsuit After Wells Notice

Consensys filed the case in response to a Wells notice from the SEC. A Wells notice usually warns of an impending lawsuit for potential violations. The SEC warned that Ethereum’s MetaMask wallet may be susceptible to securities limitations.

However, Consensys maintained that Ethereum should not be considered a security. The lawsuit aimed to have the court rule that Ethereum was not subject to SEC oversight.

The firm accused the SEC of shifting its position on Ethereum. Consensys alleged that the regulator previously said that Ethereum was not a security. The firm hoped for a legal clarification to shield Ethereum from SEC regulation.

Regulatory Conflict Likely to Continue

Despite the court’s judgment, the SEC’s inquiry against Ethereum is not over. Earlier this year, the SEC ended its investigation into Ethereum 2.0, although other issues continue under investigation.

Consensys expressed disappointment following the dismissal. The firm emphasized that the court did not consider the core of its argument. It also reaffirmed its commitment to fighting what it perceives as SEC overreach.

Although this lawsuit has been dismissed, the conflict between cryptocurrency firms and authorities is far from done. The SEC’s efforts to regulate the business continue, and other legal challenges are anticipated in the future.