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

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

AccessTimeIconJun 19, 2024 at 8:59 a.m. UTC
Updated Jun 20, 2024 at 6:54 p.m. UTC
  • The SEC told Consensys' lawyers it wasn't recommending an enforcement action after ending an investigation into the company.
  • The ether price rose after the news.

The price of ether (ETH) rose after Consensys received letters from the U.S. Securities and Exchange Commission (SEC) saying the regulator had ended its investigation into the technology incubator company and was not going to recommend an enforcement action against it.

The SEC told Consensys, whose products include the MetaMask wallet, it was not bringing any enforcement actions in a pair of letters sent to its law firms on Tuesday. In a blog post, Consensys said the SEC was "closing its investigation into Ethereum 2.0."

The letters had the subject line "Re: In the Matter of Ethereum 2.0 (C-08950)," but did not otherwise explicitly mention the blockchain associated with the second-largest cryptocurrency by market capitalization.

"We have concluded the investigation in the above-referenced matter," one letter said. "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 said that while it's announcing the conclusion of an investigation, that should not be taken to mean there will never be an enforcement action.

"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 on its part for the reasons mentioned above. 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 said, citing a Wells Notice explainer on the SEC website.

A second letter echoed the language about concluding an investigation, while also saying it did not agree with any factual statements or legal conclusions expressed by Consensys' own attorneys in a letter sent to the regulator asking about ETH's status as a security given the SEC's approval of certain spot ether exchange-traded fund application filings.

Consensys sued the SEC in April, alleging that the regulator was investigating whether Ethereum, post-merge, might be a security.

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%.

CORRECTION (June 19, 09:27 UTC): Corrects spelling of Consensys in headline.

Edited by Sheldon Reback.


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Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.