Key Points

Consensys lawsuit documents show that the SEC approved a law enforcement investigation into Ethereum 2.0 on April 13, 2023.
This means that SEC’s Chair Gary Gensler believed that ETH was a security for over a year.

According to the latest reports coming from Fox Business, the Securities and Exchange Commission and chairman Gary Gensler believed for over a year that Ethereum is an unregistered security and it’s trading out of compliance with current federal regulations.

The news comes following the filing of an unredacted complaint against the SEC by Ethereum company Consensys. The company filed the lawsuit in a Texas federal court last week as a response to a so-called Wells notice that it had received.

The note detailed the SEC’s plans to sue the firm for allegedly failing to comply with federal securities laws.

Forbes notes that Ethereum developer Consensys sued the US SEC to pre-empt an expected enforcement action and force the agency to clarify its position on whether ETH is a security.

Fox Business reported that the new documents have been filed today, and have yet to be reported. They offer insight into the timeline behind the SEC’s thinking regarding Ethereum’s alleged status as a security.

The filing on March 28, 2023, showed that the head of the SEC’s Division of Enforcement, Gubir Grewal, approved a formal order of investigation into ETH’s status as a security. This authorized enforcement staff to investigate and subpoena people and entities involved in buying and selling ETH.

According to the filing, “Ethereum 2.0″‘s investigation was based on the SEC’s belief that possible offers and sales of certain securities, including but not limited to ETH, had occurred since back in 2018.

Fox Business also notes that if Gensler finds ETH to be a security, this would contradict prior SEC guidance under chairman Jay Clayton.

Consensys sues SEC as FBI releases crypto services warning

Last week, we reported that the SEC is going after MetaMask, accusing it of acting as an unlicensed Broker Dealer engaged with trading securities on behalf of clients. As a response, Consensys sued the SEC over regulatory overreach.

The team behind Consensys noted on X that the goal behind their move was to ensure that Ethereum remains a vibrant and indispensable blockchain platform.

Also, they addressed the need to preserve access for the countless developers, market participants, and institutions that have a stake in the world’s second-largest blockchain.

Recently, it’s been revealed that according to the latest reports coming from Reuters, the US SEC is expected to deny the approval of Ethereum ETFs in May.

All this happened in the crypto industry, as the FBI released a warning to Americans to stop using non-KYC crypto services. Amidst all the turmoil, the crypto community fought back, defending the right to privacy.