US Judge Dismisses Consensys Case Against SEC; But Why?

Why Trust Tech Report

Tech Report is one of the oldest hardware, news, and tech review sites on the internet. We write helpful technology guides, unbiased product reviews, and report on the latest tech and crypto news. We maintain editorial independence and consider content quality and factual accuracy to be non-negotiable.

US federal Judge Reed O’Connor has dismissed Consensys’ Ethereum and MetaMask claims against the Securities and Exchanges Commission (SEC). 

Consensys filed a complaint in April asking the court to declare Ethereum not a security and prevent an SEC enforcement action against its MetaMask wallet.

The months-long legal battle ended with the judge siding with the SEC and tossing the suit for lack of subject matter jurisdiction. 

Court Tosses Consensys/SEC Suit

On April 25, blockchain development company Consensys sued the SEC in the US District Court for the Northern District of Texas. The suit also targeted the SEC’s chairman, Gary Gensler, and its five commissioners.

The company accused the SEC of “unlawful seizure of authority” over Ethereum as a security, citing a Wells notice by the agency over MetaMask’s staking and swap service.

It further claimed that the regulator’s actions threaten the Ethereum network and everyone holding Ether, including Consensys. The suit also sought to block the SEC from launching an enforcement action against its MetaMaskt wallet. 

In a recent court order, Judge O’Connor dismissed the firm’s Ether and MetaMask claims. He noted that the Wells notices don’t mark the end of the agency’s decision-making process nor establish the plaintiff’s legal obligations or rights. Also, the Well notice imposes zero legal consequences on Consensys.

Additionally, Judge O’Connor dismissed the blockchain firm’s claims that the SEC was investigating Ether. This claim was dismissed because the regulator had dropped its probe of Ether as security after approving the ETH ETFs in May. 

In June, Consensys revealed that the SEC had notified them that it had decided to close its probe into Ethereum. The blockchain firm saw this as a major win for the crypto industry. 

However, it revealed it would continue the lawsuit to establish that MetaMask Staking and Swap offerings do not violate US Securities laws.

Consensys to Contest SEC’s MetaMask Case In New York

Although Consensys’s original complaint aimed at blocking a potential SEC lawsuit over its MetaMask offerings, the regulator eventually sued the firm. 

In July, the SEC sued the blockchain-developing firm for operating as an unregistered broker via its MetaMask swap services. The case is currently in the US District Court for the Eastern District of New York.

Meanwhile, in the latest order, O’Connor dismissed the MetaMask claims, saying enforcement actions don’t define final agency action. He said Consensys has failed to identify final agency action to justify a judicial review, adding that the claim lacks a ripe controversy. 

Following the recent judgment, Consensys has indicated plans to continue fighting against the SEC’s MetaMask claims. A part of its X post reads:

“Unfortunately, the Texas court dismissed our lawsuit on procedural grounds without looking at the merits of our claims against the SEC. “Consensys is resolved to keep fighting for the rights of blockchain developers in the US as we contest the SEC’s action in Brooklyn,” the firm added.