A lawsuit lodged by Ethereum software giant Consensys against the U.S. Securities and Exchange Commission (SEC) and its five commissioners, including Gary Gensler, was tossed out by a Texas Federal judge on Thursday.
The SEC and Consensys have been warring for a while now as the company wanted a federal court to declare that Ether (ETH) is not a security.
Judge Ends Consensys’ Suit Against SEC
The Securities and Exchange Commission scored a major win after Judge Reed O’Connor in the U.S. District Court for the Northern District of Texas in the Fort Worth Division sided with the agency and dismissed Consensys’ claims as “moot”.
“In April 2024, Consensys filed a lawsuit to protect the Ethereum ecosystem from the SEC’s regulatory overreach and stand up for the industry that has been subject to the agency’s reckless enforcement agenda,” Consensys said in a statement on X. “Unfortunately, the Texas court today dismissed our lawsuit on procedural grounds without looking at the merits of our claims against the SEC.”
Consensys initiated the lawsuit in April after receiving a Wells Notice from the SEC on April 10, indicating its intention to bring an enforcement action against the company for breaking securities laws via its MetaMask wallet product.
“The SEC’s unlawful seizure of authority over ETH would spell disaster for the Ethereum network, and for Consensys,” the original suit alleged.
However, Consensys revealed in June that it had heard the Wall Street regulator had dropped its probe into Ethereum, which at the time was described as a “major win” for the industry. The Web3 development firm said it planned to continue the case as it was seeking a “declaration that offering the user interface software MetaMask Swaps and Staking does not violate the securities laws.”
But later that month, the SEC sued Consensys over its failure to register as a broker through its MetaMask swaps service, as ZyCrypto reported. That suit was filed in the U.S. District for the Eastern District of New York.
Judge O’Connor ruled in the Sept. 19 order that none of the SEC’s alleged actions regarding MetaMask were “final”.
“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,” the Judge wrote. “Defendants’ motion to Dismiss Plaintiff’s MetaMask claim on ripeness grounds is GRANTED.”
Fight Against The SEC Continues
Consensys stressed that it would “keep fighting for the rights of blockchain developers” in its case with the SEC in Brooklyn, adding:
“Outside of court, we have also seen signs of what could be a momentous step change in Washington’s sentiment towards cryptocurrencies and digital assets during a crucial period for U.S. politics. We are on the right path, but must remain vigilant.”
In recent years, the SEC has also brought suits against crypto exchanges like Coinbase, Binance, and Kraken. Uniswap Labs revealed in April that it had also received a Wells Notice from the regulator. The SEC has also recently targeted the leading NFT marketplace, OpenSea.