In two earlier posts, we reported about Consensys filing a pre-emptive lawsuit against the United States Securities and Exchange Commission seeking, among other things, a declaration that (i) Ether is not a security and that, accordingly, the SEC’s investigation into Ether and Ethereum and any resulting enforcement actions exceed its regulatory authority; (ii) any enforcement action against Consensys premised on Ether being a security or Ether transactions being securities transactions would violate due process and fair notice; (iii) Consensys neither acts as a broker nor offers or sells securities through the Swaps and Staking functionality of its MetaMask wallet software; and (iv) any investigation or enforcement action against Consensys premised on it acting as a broker or offering and selling securities through its MetaMask software would exceed the SEC’s authority. Consensys also sought an order enjoining the SEC from continuing to investigate or bringing an enforcement action with respect to its sales of Ether and as to MetaMask.

We also reported how the SEC surprised the crypto community on May 23, 2024 when it effectively approved the sale of spot Ether Exchange-Traded Funds (ETFs).

As a result,  Consensys sent a letter asking the SEC to confirm that the ETH ETF approvals which were predicated on ether being a commodity, meant the agency would close its Ethereum 2.0 investigation.  On June 18, 2024, Consensys reported that the SEC Enforcement Division responded by saying that it was closing its investigation into Ethereum 2.0 and would not pursue an enforcement action against Consensys.  Consensys trumpeted this “big win” but also made clear that industry’s battle would have to continue until the SEC abandoned  “its unprincipled and opaque regulation-by-enforcement campaign in favor of much-needed regulatory clarity for an industry that serves as the backbone to countless new technologies and innovations.”  In that regard, Consensys stated that it was not abandoning its lawsuit against the SEC because it still needed the relief it was seeking regarding the MetaMask product.

Although the SEC did not formally take the position that Ether is not a security, the move by the SEC lends further support to that conclusion.  This is also consistent with the position of the CFTC, which has said that Ether is  a commodity. 


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. David has been included in Chambers for his expertise in international arbitration. He is the editor of the firm's blockchain blog.