House's McHenry Accuses SEC Chief Gensler of Misleading Congress on Ethereum

The chairman of the House Financial Services Committee says Gensler refused to discuss his view on ETH in testimony even after the SEC was investigating it as a security.

AccessTimeIconApr 30, 2024 at 9:40 p.m. UTC
Updated Apr 30, 2024 at 9:42 p.m. UTC
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U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler has been accused of misleading Congress by Rep. Patrick McHenry, the chairman of the House Financial Services Committee, who said Gensler's agency already knew it considered Ethereum's ether a security before he attended a hearing and declined to answer that question.

"Chair Gensler refused to answer questions regarding the SEC's classification of ether," McHenry said in a statement posted on X. "New court filings show this was an intentional attempt to misrepresent the commission's position."

The classification of (ETH), the second-largest cryptocurrency by market cap, is a major question hanging over the U.S. oversight of digital assets, and it's being fought on multiple legal fronts. If ETH is a security that should be registered and regulated by the SEC, then many other tokens may also fit that definition.

Documents in Consensys' newly filed lawsuit against the SEC describe how the agency was pursuing an investigation into the nature of ETH days before Gensler testified in April 2023. Consensys is suing the agency ahead of an expected SEC enforcement action.

But McHenry's argument suggests that the agency's investigation equates with an actual policy position.

Spokespeople for the SEC didn't immediately respond to a request for comment on McHenry's accusations.

According to the SEC's investigations manual, an investigation "is appropriate and necessary to determine whether a violation of the federal securities laws may have occurred or may be occurring," crypto attorney Grant Gulovsen pointed out to CoinDesk. It's not a finding in itself, so the SEC may not have made a formal determination on how ETH should be categorized.

"I agree with Consensys that if the SEC determined all offers and sales of ETH involved securities transactions it would be devastating to the entire crypto industry, but since the SEC hasn’t actually done that yet, why try to force the issue?" Gulovsen said.


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Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.

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