A U.S. district judge has dismissed a case brought against the Securities and Exchange Commission (SEC) by blockchain and web3 development company Consensys Software Inc. The dismissal has followed a lengthy back-and-forth between the SEC and Consensys over the past year.

Legal Ruling

Judge Reed O'Connor in the U.S. District Court for the Northern District of Texas in the Fort Worth Division dismissed Consensus claims on Thursday and sided with the SEC.

' For the reasons stated above, Defendants' Motion to Dismiss Plaintiff's ETH claims is GRANTED, and Counts I, II, and III are DISMISSED AS MOOT,' Judge O'Connor wrote.

He noted that the plaintiff conceded it was not pursuing an APA claim under Count IV. Additionally, he granted the SEC's motion to dismiss Consensys' MetaMask claims for lack of subject matter jurisdiction. Consequently, the action was dismissed without prejudice.

Consensus Initial Lawsuit

Consensys sued the SEC in April, partly over how the agency categorized ether (ETH) as a security. Consensys stated that the SEC had decided ETH is security and alleged that the agency had 'trained its sights' on the firm's MetaMask software.

The complaint also mentioned that the SEC staff sent Consensys a Wells notice in April, signifying a formal notice that the agency planned to bring an enforcement action against them.

SEC Investigation and Further Actions

In June, Consensys announced that the SEC was closing its investigation into Ethereum, describing it as a 'major win' for the industry.

Despite this, Consensys planned to continue the lawsuit to seek a declaration that offering the user interface software MetaMask Swaps and Staking did not violate securities laws.

Then, in July, the SEC sued Consensys for failing to register as a broker through its MetaMask swaps service, filing the lawsuit in the U.S. District Court for the Eastern District of New York.

Judge's Remarks on MetaMask

Judge O'Connor pointed out that none of the SEC's actions regarding MetaMask were 'final.'

He stated, 'Because Plaintiff has not identified final agency action that would render the claim fit for judicial review and because withholding consideration subjects Plaintiff to scant, if any, hardship, the claim lacks a ripe case or controversy.'

As such, the judge granted the SEC's motion to dismiss Consensys' MetaMask claim on ripeness grounds.

Conclusion and Future Implications

As of this writing, neither Consensys nor the SEC has responded to requests for comment.

This case underscores the ongoing scrutiny blockchain companies face from regulatory bodies and highlights the importance of understanding how securities laws apply to digital assets. The dismissal may set a precedent for future cases involving blockchain technology and regulatory oversight.