A lawsuit filed by Consensys against the Securities and Exchange Commission (SEC) reveals that the US regulator has secretly considered Ethereum (ETH) a security since April 2023, despite the ambiguity of its chairman’s public statements.
SEC has been secretly investigating Ethereum for a year
Surprising revelations shed light on the considerable involvement of the Securities and Exchange Commission (SEC) in its relentless war against the crypto ecosystem. The documents filed by Consensys revealed this Monday, underscore the SEC’s determination in its strict approach to cryptocurrencies.
According to unredacted portions of a complaint filed by Consensys against the American regulator, the SEC launched an internal investigation into ”Ethereum 2.0″ from March 2023.
According to Consensys, an order signed by Gurbir Grewal, director of the Division of Enforcement, explicitly authorizes SEC employees to investigate ETH transactions qualifying Ethereum as a “security” with no exemption from registration.
On March 28, 2023, Gurbir Grewal, Director of the Division of Enforcement, approved the Formal Order of Investigation in the “Ethereum 2.0” matter (the “Formal Order”), delegating broader authority to SEC staff to investigate and issue subpoenas.
Statement from Consensys’ lawyers
This revelation contrasts with the evasive public statements made by Gary Gensler, SEC Chairman who has consistently refused to clarify the official position on Ethereum’s status when asked.
Many in the crypto industry hoped that, like bitcoin, ETH would be considered a commodity, paving the way for its integration into the US economy. The president of the CFTC had also explicitly called Ethereum a commodity in the past.
The Merge event has whetted the SEC’s appetite!
The SEC’s scrutiny of Ethereum SEC seems to have intensified after The Merge in September 2022, which transformed the blockchain from proof of work to proof of stack. This new consensus mechanism allows users to stake their ETHs and earn interest on them to secure the network, a business model that clearly displeases the regulator.
In March, the SEC issued subpoenas to several companies collaborating with the Ethereum Foundation, as part of a campaign to determine ETH’s regulatory status.
In sum, this case highlights the persistent differences of opinion between US regulators on the nature of cryptocurrencies such as Ethereum. While the CFTC seems inclined to treat ETH as a commodity on a par with bitcoin, the SEC is taking a harder line, likening it to an unregistered security.
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.
