Joe Rubin is in a fight with the Securities and Exchange Commission. He claims that financial regulators are not only waging war against Ethereum, but also trying to wrest jurisdiction over the future of the internet. So Rubin decided to fight back.
In 2015, Rubin was part of the team that created Ethereum, the computer network that is home to the world's second-largest cryptocurrency, known as ETH. Later that year, Rubin founded ConsenSys with the broad ambition of supporting the development and adoption of Ethereum, building software products on top of the network. In April, ConsenSys received an unwelcome letter, known as a Wells Notice, from the SEC informing it that the company was about to be sued. ConsenSys said the regulatory complaint concerns its MetaMask, one of the software products in the company's stable. MetaMask is a crypto wallet that allows users to store cryptocurrencies and interact with Ethereum-based apps.
ConsenSys claims that an unpublished SEC notice states that MetaMask has made it an unregistered securities broker. Specifically, the SEC takes issue with two features of MetaMask. One is the ability for users to trade between different tokens, and the other is the ability to lock up tokens in exchange for regular rewards, a process called staking.
On April 25, ConsenSys filed its own lawsuit with the SEC. The complaint accuses regulators of an “unlawful usurpation of ETH” that “does not have any of the attributes of a security,” a specific type of financial instrument over which the SEC has control. If the SEC has its way, “it would spell disaster for the Ethereum network,” the complaint alleges.
According to ConsenSys, in the Wells notice, the SEC did not refer to ETH itself as a security, instead focusing on the MetaMask feature. However, ConsenSys says the agency has been secretly conducting research on Ethereum for years with the view that ETH should be reclassified as Ethereum.
Consensis argues that this is not fair. That's because an SEC director has previously described ETH as a commodity rather than a security, and another U.S. financial regulator, the Commodity Futures Trading Commission, has made similar claims. “ConsenSys built its business on the back of this regulatory agreement,” the complaint says.
In filing the lawsuit, ConsenSys seeks to clarify the limits of its jurisdiction, take itself and Ethereum out of the SEC's clutches, and retaliate against what the rest of the crypto industry calls “aggressive and illegal SEC overreach.” I hope to encourage you. An SEC spokesperson declined to comment on ConsenSys' specific allegations, saying, “Violations of securities laws, including a rulebook to prevent fraud and manipulation, proper disclosure, sequestration of client assets, and protections against conflicts of interest, are a violation of investor rights.” “We are depriving them of important protections,” he said. , oversight by self-regulatory bodies, and periodic inspections by the SEC. Investors are the ones who will be harmed, and America's financial markets will be the ones who are likely to be harmed. ”
The following Q&A has been edited for brevity and clarity.
