SEC claims unsupported in law

Ethereum infrastructure developer Consensys has filed its response to the U.S. Securities and Exchange Commission’s claims of federal securities law violations, adding to its lawsuits against the agency.

The SEC previously accused Consensys’ crypto wallet, MetaMask, of operating as an unregistered broker and securities issuer.

Consensys fully refuted the SEC’s allegations, criticizing the agency and its chair, Gary Gensler, for what it described as an unconstitutional attack on the decentralized finance ecosystem. Its court-submitted reply reaffirmed its stance and dissatisfaction with the SEC’s lawsuit.

This action is just the latest step in the SEC’s recent campaign to seize control over the future of blockchains and cryptocurrency, one of the fastest-growing and most innovative technologies in the world… The SEC’s attempt to impose its regulatory authority on this technology and insert itself into this crypto architecture is unsupported in the law — its claims must fail.

Consensys response to SEC suit

Before becoming the subject of an SEC probe, Lubin’s firm had sued the SEC over its Ethereum (ETH) investigation. Agency prosecutors closed the inquiry and promptly filed a complaint against MetaMask’s creator. The SEC alleges that MetaMask facilitated illegal securities trading and that its staking service violated financial regulations.

Consensys countersued the regulator to determine whether the law grants the SEC regulatory oversight. Bill Hughes, a lawyer for Consensys, revealed that U.S. Judge O’Connor granted an expedited calendar for the case.

Meanwhile, CEO Joseph Lubin announced staff layoffs attributed to regulatory battles and macroeconomic factors, with Consensys reducing its workforce by 20%.

Several firms under pressure from SEC litigation may see the approaching U.S. general elections as a potential advantage. Digital asset companies have donated over $190 million to crypto-focused super PACs like Fairshake, outspending all other industries.

Republican candidate Donald Trump has stated he would dismiss Gensler in January 2025 if elected. SEC legal actions may temporarily stall in the event of a commissioner stalemate. Conversely, Gensler could continue in office until 2026 if Democrat Kamala Harris wins.