A deeper look into the SEC’s position on ether has been provided by Consensys’ lawsuit against the US Securities and Exchange Commission.According to a story by Fox Business producer Eleanor Terret, the SEC and its head, Gary Gensler, thought Ether was a security for a while.The SEC and Gensler “seem to have believed for at least a year” that Ether was a “unregistered security trading out of compliance with current federal regulations,” according to Terret, who cited court filings from Ethereum software company Consensys on April 29.
The fresh details surfaced just days after Consensys on April 25 filed an unsealed lawsuit against the SEC in a federal court in Texas.The filing was made in response to a warning that the securities commission had sent to Wells, outlining the plans to sue the company for violating federal securities laws.
In line with the updated document, on March 28, 2023, Gurbir Grewal, the director of the SEC’s Division of Enforcement, authorized a formal order of investigation over Ether’s securities classification.Investigating and subpoenaing people and organizations involved in the purchase and sale of cryptocurrencies is what the “Ethereum 2.0″ inquiry purportedly gave enforcement personnel permission to do.The SEC told subpoena recipients to keep the probe under wraps if they wanted more information about it, according to Terret, who cited anonymous people with firsthand knowledge of the situation.
The SEC allegedly believed that possible unregistered offerings and sales of Ether had been going on since at least 2018. This belief served as the foundation for the “Ethereum 2.0″ inquiry.It will go against previous SEC recommendations issued by former Chair Jay Clayton if the Gensler SEC determines that Ether qualifies as a security.In a speech given in June 2018, Bill Hinman, the Director of Corporation Finance at the time, outlined the SEC’s stance that Ether and Bitcoin were not securities.
According to the latest documents, on April 13, 2023, the five-member commission authorized the Division of Enforcement’s “Ethereum 2.0″ investigation. This was merely five days prior to Gensler’s appearance before the House Financial Services Committee, during which he declined to respond to inquiries regarding the SEC’s belief that Ether was a security.The announcement was made a few days after companies and applicants for a possible spot Ethereum exchange-traded fund in the United States stated that the SEC would probably postpone making a decision on whether to approve the product in May.Given that Gensler declined to say last year whether Ether was a security or not, Bloomberg ETF analyst Eric Balchunas thinks that Gensler’s position on Ether may have an effect on the choice.