Consensys has initiated legal action against the U.S. SEC, contesting what it characterizes as the agency’s unlawful endeavor to expand its constitutional mandate to encompass supervision of Ethereum (ETH), the second-largest decentralized network in the crypto sphere.
The blockchain developer contends that the SEC has inaccurately classified ETH as a security and taken an “irresponsible stance” that could impede innovation if not addressed.
“We have time and time again witnessed the current SEC contradict itself with ever-changing views on the blockchain, consistently mischaracterizing this technology and what is built on it as a shallow and doomed investment scheme, rather than as the breakthrough technology it is.” – Consensys announcement on SEC lawsuit
The 34-page legal filing unveiled on April 25 asserts that the SEC’s aggressive enforcement actions could undermine the progress made by Congress in shaping stablecoin policies and potentially spur technological progress beyond the confines of the United States.
Consensys pointed out that this “aggressive regulatory overreach” by the SEC goes beyond the boundaries of U.S. capital markets and runs contrary to the original scope of the watchdog’s mandate.
Consensys retaliates
The complaint from the creator of MetaMask arises amidst heightened litigation efforts by the SEC against the crypto industry, as the regulatory body seeks an additional $158 million to rein in the “wild west” atmosphere of the digital asset ecosystem.
Moreover, the lawsuit is a reaction to a Wells Notice sent to Consensys earlier this month, indicating that MetaMask could face allegations of functioning as an unregistered broker-dealer entity.
The industry is rallying to oppose an investigation into the Ethereum Foundation, a non-profit organization committed to enhancing the ETH ecosystem. Numerous companies and enterprises received a voluntary inquiry from an undisclosed state authority.
Following accusations of federal violations, stakeholders such as Coinbase and Kraken are engaged in legal battles with the Wall Street securities regulator. Industry advocates and dissenting SEC Commissioners like Hester Peirce argue that the agency has failed to establish clear rules for the emerging crypto market.
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