Texas court dismisses Consensys lawsuit against SEC

The lawsuit launched by Consensys against the Securities and Exchange Commission and SEC Chair Gary Gensler was dismissed in a Texas court on Thursday night. 

The Consensys suit was originally filed in April and contained some bombshells including the allegation that the SEC had opened an investigation into Ethereum and that the regulator had issued the company behind MetaMask a Wells notice. 

“On April 10, 2024, the SEC staff sent Consensys a ‘Wells Notice’ stating its intent to imminently recommend that the Commission bring an enforcement action against Consensys for violating the federal securities laws through its MetaMask Swaps and MetaMask Staking products,” the April filing said.

The notice gave the company a heads-up that the SEC had concluded an investigation and was mulling a lawsuit, but it didn’t necessarily mean that the regulator would file a suit. 

Though the SEC has, since the April filing, filed its own lawsuit against Consensys. The regulator targeted MetaMask Swaps, and claimed that Lido and Rocket Pool are unregistered securities. 

Read more: The SEC still has it in for Consensys

Judge Reed O’Connor noted that in his decision on Thursday as he dismissed the claims about MetaMask’s offerings.

“Similarly, the enforcement actions do not constitute final agency actions,” he wrote. “The Notice neither marks the consummation of the agency’s—i.e., SEC’s— decision making process nor establishes Plaintiff’s legal rights or obligations.”

The claims around ETH brought by Consensys were dismissed as moot — unsurprising given that the SEC announced it was dropping its investigation into ETH earlier this summer right as it gave the ether ETFs the green light. 

“Unfortunately, the Texas court today dismissed our lawsuit on procedural grounds without looking at the merits of our claims against the SEC,” Consensys said in a statement. “The Texas court today recognized that the SEC already gave Consensys the relief it sought on that critical issue for the Ethereum ecosystem. 

“Outside of court, we have also seen signs of what could be a momentous step change in Washington’s sentiment towards cryptocurrencies and digital assets during a crucial period for US politics. We are on the right path, but must remain vigilant. Consensys is resolved to keep fighting for the rights of blockchain developers in the US as we contest the SEC’s action in Brooklyn.”

The SEC didn’t immediately return a request for comment.

Updated September 19, 2024 at 5:56 pm ET: Added statement from Consensys.

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