SEC Closes Investigation into Ethereum 2.0, Consensys Claims Victory

• The U.S. SEC has concluded its investigation into Ethereum 2.0, announcing no enforcement action against Consensys.
• Consensys continues its legal efforts to ensure that MetaMask Swaps and Staking do not violate securities laws.

Leading Ethereum developer Consensys announced on June 18 that the U.S. Securities and Exchange Commission (SEC) has concluded its investigation into Ethereum.

“Today we’re happy to announce a major win for Ethereum developers, technology providers, and industry participants: the Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0,” Consensys wrote in an X (formerly Twitter) post.

Consensys also stated that this decision came after a June 7 letter they sent to the SEC, requesting confirmation that the ETH ETF approvals in May, based on Ether being classified as a commodity, would lead to the closure of the Ethereum 2.0 investigation.

Additionally, the Ethereum developer seeks a ruling that using MetaMask Swaps and Staking does not violate securities laws. Achieving the necessary regulatory clarity has necessitated litigation, which is crucial for the development of an industry that underpins numerous new technologies and innovations.

Consensys senior counsel Laura Brookover also took it to X and revealed that the SEC, in a response letter to the firm, stated it does not plan to recommend an enforcement action. However, the SEC did not provide immediate comments when requested.

In March, Fortune reported that the SEC had issued subpoenas to several companies as part of efforts to classify ETH as a security. Consensys initiated legal action against the SEC in April following a Wells notice, which indicated potential securities law violations by its MetaMask crypto wallet.

The lawsuit highlights that since early 2023, the SEC and its Chair Gary Gensler have considered ETH a security. Additionally, SEC Division of Enforcement Director Gurbir Grewal authorized a formal investigation into Ether's status as a security on March 28, 2023. Consensys confirmed that this lawsuit is still active.

In March, a GitHub commit dated February 26, 2024, revealed that the Ethereum Foundation was under investigation by a state authority. The commit involved removing a section from the website's footer due to a confidential inquiry from the state. 

Additionally, the website's "warrant canary"—a tool used by organizations to indicate they have not received a secret government subpoena—was also removed. This canary typically appears as a specific text or visual symbol, like a colorful bird in the case of the Ethereum Foundation. 

Edited by Harshajit Sarmah