Legal Expert Says Consensys’ Fight with SEC Continues Despite End of Ethereum Investigation

Attorney Rispoli says as Consensys continues its legal fight against the SEC, the lawsuit’s outcome could determine the regulator’s actual position on Ethereum. 

There have been mixed reactions surrounding the SEC’s decision to close investigations into Ethereum 2.0 without recommending an enforcement action. Attorney Fred Rispoli shared his reaction to the development via an X thread. 

Although it is certainly awesome to not be subject to an SEC investigation, substantively this "closing" of the investigation may not mean much. Why? Because of the post below. Consensys' fight continues. In district court. In Texas. Substantively, this lawsuit and an SEC…1/4 https://t.co/OR5LbANvW6

— Fred Rispoli (@freddyriz) June 19, 2024

According to Rispoli, the SEC’s decision to close investigations into Ethereum might appear to have a positive outcome on the surface, as it eliminates the immediate threat of an enforcement action involving civil fines and criminal charges. However, an essential part of the issue remains unresolved. 

Consensys Continues Fight with SEC  

Notably, Ethereum developer Consensys disclosed that its legal fight with the SEC is not over yet. In March, the SEC issued a subpoena to Consensys, revealing its investigation into whether the company violated securities laws via the staking and swap services offered on its Metamask crypto wallet. 

As a result, Consensys sued the SEC in April, urging a Texas District Court to declare that the Metamask offerings did not violate securities laws. 

With the SEC not commenting on the status of Metamask’s staking and swap services, Consensys noted that its fight with the regulator continues. 

In the latest tweet, Consensys stressed the importance of regulatory clarity toward fostering innovation, noting that it should not require a lawsuit to achieve this clarity, especially for the swap and staking services offered on its wallet. 

Attorney Rispoli Reacts 

Commenting, Attorney Rispoli noted that the lawsuit regarding Metamask’s staking and swap services essentially addresses the same substantive concerns as the SEC’s potential enforcement actions. 

According to him, the only differences are the parties’ position switches and the burden of proof. The lawyer said he anticipated that the SEC would attempt to dismiss the Texas case and refile an enforcement action against Consensys in a favorable jurisdiction. However, this outcome seems unlikely now that the SEC has closed its investigation. 

Consensys Lawsuit Could Expose SEC True Position on ETH  

Moreover, he suggested that the outcome of the lawsuit will be crucial in determining the SEC’s true position on Ethereum. Per Rispoli, if Consensys dismisses the lawsuit, matters will remain unchanged from before the SEC’s investigation into Ethereum 2.0 started. 

Conversely, if the software company continues the lawsuit, Attorney Rispoli said the underlying issues will still be litigated. However, it would not contain any threat of fines and potential jail time that would have accompanied an SEC-filed enforcement action. 

…civil fines/penalties and jail time had the enforcement action been filed. What happens next will be extremely illuminating in determining–substantively–what the SEC's actual, public, agency position is on $ETH. 4/4

— Fred Rispoli (@freddyriz) June 19, 2024