Consensys Sues US SEC over Its Attempts to Label Ethereum Security

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As an observer with a background in finance and technology, I believe that the ongoing legal battle between Consensys and the US Securities and Exchange Commission (SEC) over Ethereum’s classification as a security or commodity is a significant development in the crypto industry. The SEC’s decision to potentially reject the spot Ethereum ETF based on limited data compared to Bitcoin’s ETF, while also investigating Ethereum-based DeFi projects, has created uncertainty and tension within the Ethereum community.

As an observer, I can share that there have been growing expectations that the SEC may face legal action in the future for intending to label Ethereum (ETH) as a security and denying the approval of spot Ethereum Exchange-Traded Funds (ETFs). The deadline for the decision on these ETFs is approaching, set between May 23rd and 24th. Many experts in the field predict that the SEC will ultimately reject the proposed spot Ethereum ETFs.

Based on the consensus among experts, I observe that the US Securities and Exchange Commission (SEC) is expected to make the case that Ether futures exchange-traded funds (ETFs) have insufficient historical data in comparison to their Bitcoin counterparts.

According to a previous report by Coinspeaker, the US Securities and Exchange Commission (SEC) has initiated investigations into Decentralized Finance (DeFi) projects built on the Ethereum network, specifically targeting Uniswap (UNI), following the delivery of Wells notices.

As an analyst, I understand that the Ethereum community holds the viewpoint that Ethereum functions as a commodity rather than a security. Consequently, they advocate for the approval of the spot Ether ETF without delay.

Consensys Fights for Ethereum Community Against US SEC

As a researcher studying the developments within the web3 space, I’d like to share some recent news: Consensys Software Inc., an experienced blockchain and software company, filed a lawsuit against the US Securities and Exchange Commission (SEC) on April 25, 2023, in the US District Court for the Northern District of Texas. The crux of this legal action by Consensys revolves around three pivotal issues that are essential for maintaining Ethereum’s thriving status as a crucial blockchain platform.

Based on Consensys’ perspective, Ethereum functions as a worldwide computing platform rather than an investment opportunity. Consequently, it falls outside the definition of a security and is more appropriately considered as a commodity, according to the Commodity Futures Trading Commission (CFTC).

We took this step for two very basic reasons:
The Securities and Exchange Commission (SEC) should not have the power to unilaterally broaden its regulatory scope over the future development of the internet by misclassifying Ethereum (ETH) as a security.
(2) the SEC’s reckless approach is bringing chaos to developers,…
— Consensys (@Consensys) April 25, 2024

As a analyst, I would explain it this way: I want to emphasize that when it comes to web3 platforms where individuals can conduct transactions using Ethereum, such as Uniswap, they do not function like securities brokers. Consequently, the US Securities and Exchange Commission (SEC) does not hold any regulatory power over these platforms.

“According to Consensys, the SEC’s overreach of authority endangers America’s role as a trailblazer in the upcoming era of the internet.”

Based on ConsenSys’s report, approximately one-third of the 190,000 direct employees in the cryptocurrency sector are located in the United States. The US Securities and Exchange Commission (SEC) classified ETF as a non-security back in 2018, according to Hinman’s statements. In light of this ruling, ConsenSys encourages the jury to carefully consider the relevant facts.

Market Picture

The Ethereum network continues to reign supreme in the web3 space, boasting a stablecoins market capitalization of approximately $83 billion and a total value locked of around $54 billion. Over the past few years, Ethereum has supported over $268 billion in TVL (Total Value Locked) via bridges to new smart contract-blockchains.

From my perspective as a researcher, at present, Ethereum’s value hovers around $3,142, representing a nearly 10% decrease over the past two weeks. Ethereum optimists are keeping a close watch, anticipating a retest of its all-time high (ATH) once Bitcoin’s dominance experiences a turnaround.

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2024-04-26 12:37