The U.S. Securities and Exchange Commission (SEC) has brought an end to its investigation into Ethereum, opting not to pursue charges that the sale of ETH constituted securities transactions. This decision has sparked outrage within the XRP community, who accuse the SEC of biased treatment and double standards.
Consensys, the Ethereum developer, announced on Tuesday that the SEC’s Enforcement Division had concluded its investigation into Ethereum 2.0 without taking any action. Consensys took to Twitter to share the news, highlighting that the SEC would not be pursuing allegations that ETH sales were securities transactions. This development comes after the SEC’s recent approval of Ethereum spot ETFs, a move that Consensys believes solidifies ETH’s status as a commodity rather than a security.
Laura Brookover, an attorney for Consensys, shared the SEC’s notification letter and the company’s official statement on Twitter. She acknowledged the rapid changes that have occurred since Consensys filed its lawsuit against the SEC in April and celebrated the conclusion of the investigation after more than a year of scrutiny. However, the SEC’s correspondence included standard language stating that the closure of the investigation should not be seen as an exoneration.
Consensys initiated a legal battle with the SEC in April by filing a lawsuit against them. The lawsuit argued that the SEC was attempting to exert control over the future of cryptocurrency and planned to classify Ethereum as a security. Consensys revealed that the SEC had internally determined Ethereum’s status a year earlier, triggered by a Wells Notice related to Consensys’ MetaMask wallet.
Despite the closure of the Ethereum investigation, Consensys remains committed to its legal battle. The company is seeking a declaration that its MetaMask Swaps and Staking services do not violate securities laws. Consensys emphasized the importance of regulatory clarity for growth and innovation in the blockchain industry and criticized the SEC’s approach to crypto regulation.
While the closure of this investigation is a significant win for Consensys, former SEC regulator Christopher Gerold noted that it does not prevent future regulatory actions. He pointed out that the SEC has the authority to bring cases anywhere in the country, suggesting that the legal landscape for Ethereum and other cryptocurrencies remains uncertain.
The unequal treatment of Ethereum and Ripple has raised concerns within the XRP community. Bill Morgan, a prominent member of the XRP community, and several analysts have expressed their discontent, accusing the SEC of inconsistent regulatory practices. Morgan argues that the SEC’s leniency towards Ethereum, especially as it approaches the approval of a spot ETF, demonstrates a double standard.
The XRP community’s frustration stems from what they perceive as biased treatment from the SEC. Morgan highlighted that the SEC’s recent letter to Consensys, clarifying Ethereum’s status, contradicts its aggressive stance against Ripple. He believes that the criteria for classifying tokens are ambiguously applied, leading to regulatory uncertainty and uneven enforcement.
The swift resolution of Ethereum’s status in contrast to the prolonged investigation into Ripple has raised questions about regulatory consistency and potential underlying influences. The SEC’s regulatory approach is now facing intense scrutiny.