US SEC closes investigation in Ethereum 2.0, ‘major win’ for industry: Consensys

Consensys Software Inc. announced today that the U.S. Securities and Exchange Commission’s enforcement division has notified the blockchain company that it is closing its investigation into Ethereum 2.0, which it described as a “major win” for the industry.

“Ethereum survives the SEC,” Consensys wrote in its X post. “This means that the SEC will not bring charges alleging that sales of ETH are securities transactions.”

Consensys detailed in the X thread that the SEC’s decision came after the company sent a letter on June 7, which asked the agency to confirm that the spot ether exchange-traded fund approvals in May meant that it would end its investigation into Ethereum 2.0. The approval of spot ETH ETFs, though not final, was based on the premise that ETH tokens were commodities, Consensys wrote.

The blockchain development company behind the MetaMask Ethereum wallet had filed a lawsuit against the SEC in April, in opposition to the agency’s categorization of ether as a financial security. 

The company alleged in the complaint that SEC’s Gurbir Grewal, Director of the Division of Enforcement, approved the investigation into Ethereum 2.0 on March 28, 2023, to examine individuals and entities buying and selling ether. Consensys allegedly received a wells notice from the SEC in April, which meant the agency planned on bringing an enforcement action against it.

While SEC Chair Gary Gensler has avoided directly addressing the question of whether ether is a security, Commodity Futures Trading Commission Chair Rostin Behnam has categorized ether as a commodity.

“Our fight continues,” Consensys said. “In our lawsuit, we also seek a declaration that offering the user interface software MetaMask Swaps and Staking does not violate the securities laws.”

The SEC did not immediately respond to The Block’s request for comment.