SEC Investigates Ethereum’s Security Status: Consensys Reveals Formal Order of Investigation in Court Filing

The Securities and Exchange Commission (SEC) under the leadership of Gary Gensler has been actively investigating Ethereum’s security status, with a recent court filing by Consensys shedding light on the matter.

According to the filing, Gurbir Grewal, the Director of the Division of Enforcement, authorized a Formal Order of Investigation regarding ‘Ethereum 2.0’ in March 2023. This order granted the SEC staff broader authority to look into and subpoena individuals and entities involved in ETH transactions.

The Formal Order was based on information suggesting possible offers and sales of securities, including ETH, without proper registration or exemption since at least 2018. As a result, the SEC has issued subpoenas to various individuals and entities with investments in Ethereum, including Consensys.

Interestingly, this development comes shortly after Consensys filed a legal action against the SEC, arguing against the classification of Ethereum as a security. The company warned that such a designation could hinder innovation and negatively impact developers, investors, and entities utilizing Ethereum’s decentralized infrastructure.

Ethereum’s regulatory status has been a contentious issue for the SEC, with Gensler’s previous stance on ETH not being classified as a security seemingly evolving. Despite Ethereum’s shift to proof of stake, Gensler has refrained from definitively addressing its status, prompting debates within the crypto community.

While Gensler has remained tight-lipped on the matter, supporters of Ethereum have pointed to statements from former SEC officials and legal filings from other regulatory bodies to argue against its classification as a security. The ongoing investigation and legal battle between Consensys and the SEC highlight the complexities surrounding Ethereum’s regulatory status and its implications for the broader crypto industry.