What was the judge’s reasoning for dismissing Consensys’ lawsuit?
- Judge dismissed Consensys’ lawsuit against SEC, citing lack of final agency action. Consensys vowed to continue fighting SEC’s regulatory stance on Ethereum and blockchain developers.
In a surprising legal development, a Texas federal judge has dismissed a lawsuit filed by blockchain firm Consensys against the SEC. The lawsuit also named its commissioners, including Chairman Gary Gensler.
Details on Consensys’ lawsuit
The suit, filed in April in the Northern District of Texas, accused the SEC of attempting to dominate the cryptocurrency landscape through aggressive enforcement actions.
The company argued that the SEC’s actions, including targeting Ethereum [ETH] as a security, contradicted earlier statements. They pointed out that regulatory precedents dating back to 2018 had declared that ETH was not a security.
The firm also alleged that the SEC had launched an investigation into Ethereum, signaling its intent to regulate the asset.
Additionally, they noted that the SEC issued a Wells notice concerning MetaMask’s swap and staking features. This raised alarms about a potential shift in regulatory stance.
O’Connor dismisses the lawsuit — why?
Judge Reed O’Connor rejected Consensys’ allegations concerning MetaMask on the 19th of September, stating that “enforcement actions are not considered final agency actions.”
He added,
“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.”
Judge O’Connor further noted that the Wells notice issued by the SEC does not signify the conclusion of the agency’s decision-making process or define the legal rights or obligations of the plaintiff.
He emphasized that it does not impose any legal consequences on Consensys.
Additionally, O’Connor dismissed Consensys’ claims regarding the SEC’s investigation into Ethereum.
He deemed the claims as “moot” after the company revealed in July that the SEC had ceased its probe following the approval of Ether exchange-traded funds (ETFs) in May.
Consensys expresses frustration
After the ruling was issued, Consensys shared its reaction to X (formerly Twitter), stating:
“Unfortunately, the Texas court today dismissed our lawsuit on procedural grounds without looking at the merits of our claims against the SEC.”
The company expressed that its lawsuit against the SEC exposed what they viewed as an overreaching investigation into Ethereum.
Earlier, they had celebrated the SEC’s decision to drop its “Ethereum 2.0” investigation, viewing it as a major win for the industry and a recognition by the Texas court that the relief sought by the company had already been achieved.
Additionally, they observed a potential shift in Washington’s stance towards cryptocurrencies and digital assets. This signaled a positive change amid a crucial time for U.S. politics.
Seeing this unexpected turn of events, the company reinforced its stance by stating,
“Consensys is resolved to keep fighting for the rights of blockchain developers in the U.S. as we contest the SEC’s action in Brooklyn.”
Hence, it remains to be seen whether Consensys will meet expectations by filing a motion to dismiss the case or decide to continue challenging the SEC.
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