The SEC has suspected Ethereum of being a security since 2018, a new Consensys document reveals.
The Securities and Exchange Commission (SEC), led by Gary Gensler, began investigating Ethereum’s security posture last year, according to an April 29 court filing from Consensys.
The filing reveals that Enforcement Directorate Gurbir Grewal approved ordering a formal investigation into ‘Ethereum 2.0’ in March 2023. This formal order gave SEC staff broader authority to investigate and subpoena individuals and entities involved in ETH trading. .
It added:
“The formal order is premised on the SEC’s delegation of information showing possible offers and sales since at least 2018 for certain securities, including but not limited to ETH, for which there is no registration statement or currently in effect. . . There has been no exemption or no exemption for this.’”
The SEC has since issued subpoenas to numerous individuals and entities that invested in Ethereum, including Consensys.
Notably, this revelation came just days after Consensys filed legal action against the SEC on April 25. The company argued that the SEC’s attempt to classify Ethereum as a security represented regulatory overreach and warned that such a designation could stifle innovation and negatively impact developers. , investors and organizations utilizing Ethereum’s decentralized infrastructure.
Ethereum’s regulatory status
Ethereum’s regulatory status has been an ongoing issue for the SEC in recent years.
In 2018, Gensler stated in a lecture at MIT that ETH is not considered a security.
However, Gensler’s stance appears to have changed, especially since Ethereum’s switch to proof-of-stake. Nonetheless, he has refrained from making any definitive comments on ETH’s status despite numerous inquiries from stakeholders, including members of parliament.
While Gensler has remained silent on the matter, supporters in the cryptocurrency community have cited comments from former SEC officials like Bill Hinman and legal filings from financial regulators like the Commodity Futures Trading Commission to ensure that Ethereum does not meet the requirements. He claimed that he did not. Standards for classification as marketable securities.
