SEC Drops Case Against Ethereum
However, the US Securities and Exchange Commission did not clarify if it now defines ETH as a commodity
June 19, 2024 05:27 AM
Reading time: 1 minute, 36 seconds
TL;DR The U.S. SEC has officially closed its investigation into whether Ether (ETH) is a security. ConsenSys celebrated the decision as a major victory for the Ethereum community. This move could influence the future of cryptocurrency regulation.
The U.S. Securities and Exchange Commission (SEC) has officially closed its investigation into Ethereum 2.0. In a June 19 post, ConsenSys announced that the SEC's Enforcement Division informed them of the decision. This marks a significant win for Ethereum developers, technology providers, and industry participants.
Background
In March, Fortune reported that the SEC issued subpoenas to multiple companies related to attempts to label Ether (ETH) as a security. ConsenSys sent a letter on June 7 requesting clarification on Ether's category following the approval of spot Ether ETFs. The SEC's decision came after this letter.
The Legal Battle
Consensys had filed a lawsuit against the SEC in April. The company opposed the agency's categorization of Ether as a financial security.
The complaint alleged that Gurbir Grewal, Director of the Division of Enforcement, approved the investigation on March 28, 2023. ConsenSys received a 'Wells notice' from the SEC in April indicating an enforcement action was planned.
Conflicting Views
While SEC Chair Gary Gensler has avoided directly addressing whether Ether is a security, Commodity Futures Trading Commission Chair Rostin Behnam has categorized it as a commodity.
ConsenSys argued that Ethereum is a global computing platform, not an investment scheme. They emphasized that Ether (ETH) is a commodity, as confirmed by the CFTC.
Market Reactions
Soon after the news broke, Lookonchain reported that a significant whale investor purchased an additional 5,603 ETH ($19.6 million). Since May 30, this investor has withdrawn 16,604 ETH ($59 million) from Binance at an average price of $3,600 each.
The market rejoiced at the SEC's decision, though the statement included standard language that the closure does not clear all parties of potential wrongdoing.
Future Implications
Consensys criticized the SEC's actions as an unlawful power grab and warned that they could undermine America's leadership in the next generation of the Internet.
Bill Morgan also criticized the SEC for its inconsistent treatment of cryptocurrencies. He pointed out that the SEC gives Ethereum a 'second free pass' while aggressively targeting Ripple (XRP).
