A federal judge in Texas has thrown out a lawsuit initiated by blockchain development company Consensys against the Securities and Exchange Commission (SEC) and its five Commissioners, including Chair Gary Gensler.
The lawsuit, filed in April, sought a court ruling that Ether (ETH) should not be classified as a security, asserted that “Consensys’s sales of ETH are not sales of securities,” and aimed to prevent the SEC from taking enforcement action regarding its MetaMask wallet software, which the agency ultimately did in June.
Consensys alleged that the SEC had begun investigating Ethereum with intentions to regulate it as a security, highlighting that the agency had issued a Wells notice concerning MetaMask’s swap and staking services.
In a ruling dated September 19, Judge Reed O’Connor dismissed the allegations related to MetaMask, stating that “enforcement actions do not constitute final agency actions.” He further clarified that the Wells notice “neither signifies the completion of the agency’s — i.e., SEC’s — decision-making process nor establishes the Plaintiff’s legal rights or obligations,” and it does not “impose legal consequences” on Consensys.
Additionally, O’Connor dismissed Consensys’s claims regarding the SEC’s investigation into ETH as moot, following the firm’s July announcement that the regulator had ceased its investigation after approving Ether exchange-traded funds (ETFs) in May.
“Regrettably, the Texas court dismissed our lawsuit on procedural grounds without addressing the substantive issues of our claims against the SEC,” Consensys stated in a post on X on September 19.
The firm noted, “The SEC terminated its ‘Ethereum 2.0’ investigation after our litigation commenced, and the Texas court acknowledged that the SEC had already provided Consensys the relief it sought on this vital issue for the Ethereum ecosystem.”
Consensys expressed its commitment to continue contesting the SEC’s lawsuit concerning its MetaMask software, where the agency accuses it of operating as an unregistered broker and offering unregistered securities through MetaMask Swaps. The company is anticipated to file a motion to dismiss the case.
The SEC has not yet responded to Cointelegraph’s request for comments.
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