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

The U.S. Securities and Exchange Commission (SEC) has concluded its investigation into Consensys and announced it will not pursue enforcement action against the company. This development comes after a thorough probe into “Ethereum 2.0,” which has positively impacted the price of ether (ETH).

In letters sent to Consensys’ law firms on Tuesday, the SEC confirmed the termination of its investigation. Consensys, known for its products such as the MetaMask wallet, shared in a blog post that the SEC is “closing its investigation into Ethereum 2.0.”

The letters, titled “Re: In the Matter of Ethereum 2.0 (C-08950),” did not explicitly mention the Ethereum blockchain, which is the second-largest cryptocurrency by market capitalization. One letter stated, “We have concluded the investigation in the above-referenced matter. 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.”

However, the SEC clarified that the conclusion of the investigation does not preclude future enforcement actions. “The Commission is instructing its staff that in cases where such action appears appropriate, it may advise a person under inquiry that its formal investigation has been terminated. Such action on the part of the staff will be purely discretionary. Even if such advice is given, 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 stated, referencing a Wells Notice explainer on the SEC website.

A second letter reiterated the conclusion of the investigation and noted that it did not agree with any factual statements or legal conclusions expressed by Consensys’ attorneys regarding ETH’s status as a security, particularly in light of the SEC’s approval of certain spot ether exchange-traded fund applications.

Earlier this year, Consensys sued the SEC, alleging that the regulator was investigating whether Ethereum, post-merge, might be classified as a security.

Following the news, the price of ether rose significantly. Data from TradingView showed a 2.6% increase in ETH’s value after Consensys’ announcement on X (formerly Twitter). Over the last 24 hours, ETH is up around 3%, according to CoinGecko. 

This conclusion by the SEC marks a significant moment for Consensys and Ethereum, providing a clearer regulatory landscape for the second-largest cryptocurrency and its associated technologies.