all preemptive litigation The document, filed in a Texas federal court, aims to definitively determine Ethereum’s regulatory status. But blockchain software company Consensys’ move in its home state could be far from a final legal showdown for the cryptocurrency’s No. 2 coin as the Securities and Exchange Commission (SEC) exercises its influence across the country.
“The SEC can file lawsuits anywhere in the country,” said Christopher Gerold, a partner at Lowenstein Sandler LLP. decryption. “They can easily file lawsuits today and assert the sale of unregistered securities in their preferred jurisdiction, such as California or New York (or Washington, D.C.).”
its complainThe makers of MetaMask are the Securities and Exchange Commission (SEC) Ethereum from the inside out It is pledged as collateral for over a year. (Disclosure: Consensys is one of 22 investors. Decrypt.) Among other rulings related to MetaMask’s functionality, Consensys is seeking a judicial declaration that Ethereum is not a security.
Joe Lubin, Ethereum co-founder and CEO of Consensys, said Thursday that his company’s lawsuit aims to:Getting clarity from U.S. courts.” But despite being in Texas, the legal fight probably won’t bring clarity on its own, according to Gerold, who previously served as commissioner of the New Jersey Securities Division.
“There are a lot of judges (in Texas) who are concerned about the expansion of federal agencies and the role they play,” Gerold said. “If you are anti-regulatory (…), file a lawsuit there.”
Consensys may have made a strategic choice in filing its lawsuit in the U.S. District Court for the Northern District of Texas.judge shoppingHowever, this does not prevent the SEC from picking a legal area that is favorable to it if it decides to pursue a separate lawsuit, Gerold explained.
If the SEC wants to publicly confirm that Ethereum is a security, it does not need to do so through the Consensys lawsuit, he continued. And depending on how the high court rules when the case is appealed, Ethereum may be considered a security in one part of the United States but not another.
“It could be legal in New Jersey and illegal in Texas,” Gerold said, noting that the Federal Circuit is not bound by the decisions of other Federal Circuits.
If the Supreme Court decides not to address the question of whether Ethereum is a security, a patchwork of case law could become entrenched. Of course, Congress could ultimately enact new laws that determine how digital assets are handled, Gerold said.
The SEC did not file any charges related to ConsenSys’ alleged Ethereum-focused investigation. And Gerold expects the agency will first try to dismiss the case without telegraphing its internal thoughts about Ethereum’s legal status.
Gerold said litigation from the SEC could follow, as is usually the case, based on the Wells notice issued to Consensys. The SEC’s Wells notice generally precedes formal charges. It may still be several years before the regulatory issues for Ethereum are fully resolved and can be argued in several different courts.
“There are other paths (this) could go.” Jerrold said. “However, the idea that Consensys’ lawsuit will answer the question of whether Ethereum is a security or not is a fallacy. Ethereum is currently the only forum with that ability.”
Edited by Ryan Ozawa.
