- ConsenSys sues Texas SEC over ether classification
- Org disputes the SEC's allegations, insisting on fairness and clarity.
In the debate over Ethereum [ETH] Blockchain software giant ConsenSys was recently in the news for what could be classified as long and tedious security. It did so by taking a bold step and initiating legal action against the US SEC and its five commissioners.
Laura Brookover Insights
Commenting on the same, Laura Brookover, senior counsel and head of litigation research at ConsenSys, argued on a recent episode of “Unchained.”
“We never thought we would one day sue the SEC, but here we are. I sued.
she added,
“These are critical issues that matter to our industry, so it’s really time for them to see the light of day.”
The SEC is not only targeting ConsenSys' product MetaMask, but also the company's financial team, the executive said. They do that by asking about Ether and Ethereum developer sales.
She went on to say,
“It would be truly devastating for the United States if Chairman Gensler were to get away with misclassifying ether as a security.”
Consensys defense mechanisms
ConsenSys has consistently refuted the SEC’s underlying theory that staking turns Ether into a security, emphasizing the fundamental difference between proof-of-work and proof-of-stake mechanisms. In fact, Brookover continued to challenge the SEC's differentiation between Bitcoins. [BTC] and the Ethereum ecosystem claim:
“There's really no reason to treat them any differently, it's arbitrary. So this is probably one of the things we point to as an indication that the SEC doesn't really have any basis. I think it is.”
Although not everyone feels that way. For example, crypto lawyer Bill Morgan says:
Source: Bill Morgan/Twitter
on the contrary, Stephen NereoffA former Ethereum advisor, he believes that Ethereum has functioned as a centrally managed entity since its ICO and therefore warrants classification as a security. he added,
“This move is to distract people from the truth and is simply a cover-up.”
wells notice
Brookover highlighted ConsenSys' MetaMask swap and staking capabilities while discussing the SEC's Wells Notice targeting ConsenSys for allegedly operating as an unregistered securities broker. In contesting this accusation, she argued that MetaMask is not involved in securities distribution, but instead serves as a communication tool for the Liquid Staking Protocol.
Brookover is therefore optimistic that a successful lawsuit will bring much-needed clarity to the regulatory uncertainties surrounding cryptocurrencies.
“If we are successful, there will be some clarity on how that applies to digital assets, which will be beneficial to the industry as a whole.”
