SEC Drops Consensys Lawsuit, Signaling Shift in Crypto Regulation

Generated by AI AgentCoin World
Saturday, Mar 1, 2025 12:56 am ET1min read
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The U.S. Securities and Exchange Commission (SEC) has agreed to dismiss its lawsuit against blockchain firm Consensys, ending an eight-month legal battle over MetaMask and staking services. Consensys founder Joseph Lubin confirmed that the SEC would also close investigations against MetaMask, the company's decentralized crypto wallet. While the dismissal is expected, it still requires final approval, and the SEC has not yet issued an official statement. However, Lubin announced that a formal court filing is expected soon.

The SEC sued Consensys in June 2024, alleging that the company acted as an unregistered broker by providing staking services through MetaMask. Regulators claimed that third-party staking qualified as a securities offering because users invested funds with an expectation of returns. The lawsuit was part of a broader push to regulate digital assets under previous SEC leadership, with Consensys being one of several crypto firms targeted.

Recent leadership changes at the SEC have led to a review of its regulatory stance on digital assets. Under Commissioner Mark Uyeda, the agency has been consulting industry experts to gain a better understanding of staking and its legal status. Lubin welcomed the case dismissal, stating that while Consensys was prepared to fight the lawsuit, the outcome suggested a shift in approach.

The SEC’s decision to drop its case against Consensys comes after cases and investigations into Coinbase, Robinhood, Gemini, and OpenSea were all dropped. As the SEC case continues, pleas of the XRP community for the SEC to drop its case against Ripple have increased in intensity. Some industry figures have questioned why the SEC is continuing to pursue Ripple when it has pulled out of other cases. However, the SEC hasn’t said if it will step back from its legal actions against Binance and Kraken, as neither case is close to being resolved.

Consensys had also challenged the SEC over its supposed plans to classify Ethereum (ETH) as a security. The firm started legal proceedings against the agency in April 2024 before the SEC dropped its suit. Consensys lawyers argued that this would grant the SEC too much power in overseeing cryptocurrency and could even make normal ETH activity illegal. They cited earlier statements by former SEC Chair Gary Gensler, who said in 2018 that ETH was not a security. The SEC ended its inquiry of Ethereum in June 2024, and