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SEC Drops Ethereum (ETH) Investigation In Major Win For Crypto

SEC Drops Ethereum (ETH) Investigation In Major Win For Crypto

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The United States Securities and Exchange Commission is dropping its investigation into whether ETH is a security, which is a major win for the crypto industry.

The Securities and Exchange Commission’s decision came after Consensys sent the commission a letter requesting clarification on Ether’s category in the approval of spot Ethereum ETFs.

SEC Closes Investigation Into Ethereum

The decision was announced by Consensys, with the company stating that the Securities and Exchange Commission’s Enforcement Division had notified the company it was closing its investigation into Ethereum 2.0. Consensys hailed the decision, calling it a big win for the crypto industry. Consensys wrote in a post on social media platform X, 

“ETHEREUM SURVIVES THE SEC. Today, we’re happy to announce a major win for Ethereum developers, technology providers, and industry participants: the Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0. This means that the SEC will not bring charges alleging that sales of ETH are securities transactions.”

Consensys had sent a letter to the SEC on June 7, asking the commission whether the approval of spot Ethereum ETFs meant the commission would stop its investigation into Ethereum 2.0. Spot Ethereum ETF approvals, although not final yet, were based on the premise that ETH was a commodity and not securities. Consensys Senior Counsel Laura Brookover shared the SEC’s response to the letter. In its response, the SEC stated that it does not intend to recommend enforcement action. The SEC has not yet shared any comment on the matter. 

Lawsuit Against SEC

Consensys had filed a lawsuit against the Securities and Exchange Commission in April after the firm received a Wells Notice from the commission warning that MetaMask, its crypto wallet, may have violated securities laws. Consensys alleged that the SEC and SEC Chair Gary Gensler believed that ETH was a security since at least early 2023. The company also alleged that Gurbir Grewal, the Director of the SEC’s Enforcement Division, had approved an investigation into Ethereum 2.0 in March 2023.

SEC Chair Gary Gensler has not directly addressed whether ETH is a security. However, Commodity Futures Trading Commission Chair Rostin Benham has called ETH a commodity. Meanwhile, Consensys’s lawsuit against the SEC is still ongoing. 

“Our fight continues. In our lawsuit, we also seek a declaration that offering the user interface software MetaMask Swaps and Staking does not violate the securities laws.”

Meanwhile, David Hirsch, the head of the SEC’s Crypto Asset and Cyber Unit, has left the agency after stepping down from his role. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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