SEC Ends Probe Into Consensys, Won't Sue Over Ethereum

The U.S. regulator closed its investigation into "Ethereum 2.0," Consensys said.

The U.S. Securities and Exchange Commission (SEC) has concluded its investigation into Consensys and will not recommend any enforcement actions against the Web3 technology company, according to two letters obtained by Consensys' law firms.

The letters, both dated June 18, are related to an investigation into "Ethereum 2.0" by the SEC, according to Consensys, which develops products including the MetaMask crypto wallet. However, the letters do not explicitly mention ether (ETH), the native token of the Ethereum blockchain, which is now operating on a proof-of-stake consensus mechanism following the completion of the network's merge earlier this month.

"We have concluded the investigation in the above-referenced matter," one letter reads. "Based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against your client, Consensys Software Inc."

The letter adds that the SEC may still take enforcement action in the future.

"Even if such advice is given, however, it must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result from the staff’s investigation of that particular matter," the letter continues, citing a Wells Notice explainer on the SEC website.

A second letter echoes the language about concluding an investigation, while also adding that the SEC does not agree with any factual statements or legal conclusions expressed by Consensys' own attorneys in a letter sent to the regulator earlier this month.

In that letter, Consensys attorneys asked the SEC about the status of ether as a security, given the SEC's approval of certain spot ether exchange-traded fund application filings.

"We note that the factual statements and legal conclusions expressed by your client's counsel in their April 24, 2023 letter to the Commission's Division of Corporation Finance are not binding on the Commission or its staff," the SEC letter reads.

Consensys sued the SEC in April, alleging that the regulator was investigating whether Ethereum, post-merge, might be a security. The SEC has not brought any charges against Consensys or Ethereum.

Ether rose as much as 2.6% after a Consensys post on X, data from TradingView show. It is up around 3% over the last 24 hours, according to data from CoinGecko. The CoinDesk 20 Index (CD20), a measure of the broader crypto market, has added 1.2%.