SEC has been investigating Ethereum for over a year

Turns out the U.S. Securities and Exchange Commission (SEC) has been poking around Ethereum for a solid year. Yup, the big dogs at the SEC have been eyeballing Ethereum, trying to pin down whether it’s a security or not since 2023.

The spotlight on Ethereum got a bit brighter last week when Consensys, the company behind Ethereum software, decided they had enough and slapped the SEC with a lawsuit. They’re pretty miffed about how the SEC has been handling things, especially since the SEC’s been sniffing around since the early days of 2023.

Now, let’s break it down a bit.

The whole mess started to unravel when the SEC, under the sharp eye of Gurbir Grewal, the director of the Division of Enforcement, green-lit an investigation into the buying and selling of Ethereum back in March 2023. They didn’t just stop there; they got all official with subpoenas and gathering sworn testimonies.

SEC Chairman Gary Gensler played it coy when pressed at a Congressional testimony, dodging the bullet on whether Ethereum was a commodity or security. Behind the scenes, though, the SEC had already cranked up their investigation machinery, deeming Ethereum a security, which they weren’t shouting from the rooftops.

In their legal firepower, Consensys argues two main points. First, they’re adamant that Ethereum isn’t a security, calling the SEC’s investigation out of line. Second, they claim the SEC’s got it out for their MetaMask product, hinting that it’s some sort of broker-dealer setup. They even got a Wells notice, which is basically the SEC’s way of saying, “We might come after you.” Yet, none of this Wells drama specifically points fingers at Ethereum.

The legal battles in 2023 weren’t just about Ethereum. The SEC threw the book at Coinbase and Binance, tagging over ten different assets as securities. Ethereum, however, dodged that bullet.

Flashback to 2018, and you’ll find the SEC was singing a different tune. Back then, Bill Hinman, the then-CFO, was out there saying Ethereum, just like Bitcoin, wasn’t a security. Fast forward, and now the SEC seems to think Ethereum’s recent updates, like the Merge, might be pushing it into the security zone.

This legal tangle digs into Ethereum’s past dealings too. Consensys is being grilled over its role in Ethereum’s proof-of-stake updates, and all the operations details like acquisitions and sales. The SEC is pretty convinced that even before Ethereum’s big 2018 Merge, there were security sales going on.

To top off this drama, Consensys isn’t just sitting back. They’re throwing punches to keep the SEC from meddling in Ethereum’s business. They kicked off their legal counterattack right after the SEC waved that Wells notice in their face, signaling a possible crackdown on their MetaMask wallet services.