Ethereum developer and the company behind crypto wallet MetaMask Consensys has filed a lawsuit in a Texas court alleging regulatory overreach by the U.S. Securities and Exchange Commission (SEC). The company filed a complaint in the U.S. District Court for the Northern District of Texas that the SEC has been conducting a campaign to regulate Ether as a security, with the aim of gaining control over the future of cryptocurrency.
Consensys referred to the SEC’s earlier declaration, which dates back to 2018, that Ether is not a security. The company warned about the potential consequences that may arise if the SEC changes its stance now, especially since many firms have already established their business models based on the regulatory precedent set by the SEC.
“The US Securities and Exchange Commission seeks to regulate ETH as a security, even though ETH bears none of the attributes of a security — and even though the SEC has previously told the world that ETH is not a security, and not within the SEC’s statutory jurisdiction,” Consensys wrote in the filing.
Consensys alleged that the SEC had targeted its crypto wallet MetaMask, which enables users to self-custody Ether and other cryptocurrencies. The software developer disclosed that it received a Wells notice from the SEC on April 10, warning of potential enforcement actions related to its MetaMask Swaps and MetaMask Staking products.
Consensys’s move follows the SEC’s recent crackdown on the Ethereum blockchain network and crypto exchange Coinbase, which cited cryptocurrency as an unregistered security.
Since Bitcoin was introduced in 2009, there’s been plenty of discussion about whether cryptocurrencies like Ether are a type of currency, security, or commodity.
SEC chair Gary Gensler, who once taught a course on blockchain and cryptocurrencies at the Massachusetts Institute of Technology, is known for his strict approach to regulating crypto. He’s called the cryptocurrency market a Wild West, emphasizing its need for regulation.