SEC Ends Investigation Into Consensys, Ether Price Rises

The price of ether (ETH) rose after the U.S. Securities and Exchange Commission (SEC) concluded its investigation into Consensys, the technology incubator behind the MetaMask wallet. The SEC confirmed it would not recommend any enforcement actions against the company.

On Tuesday, the SEC sent letters to Consensys’ law firms, stating, “We have concluded the investigation in the above-referenced matter. Based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against your client, Consensys Software Inc.”

The letters, titled “Re: In the Matter of Ethereum 2.0 (C-08950),” did not explicitly mention the Ethereum blockchain. However, the closure of the investigation into Ethereum 2.0 significantly impacts the crypto community.

Consensys announced the SEC’s decision in a blog post, noting the regulator was “closing its investigation into Ethereum 2.0.” The letter also clarified that this investigation’s conclusion does not guarantee there will never be an enforcement action. The SEC stated, “Even if such advice is given, it must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result from the staff’s investigation of that particular matter.”

Consensys, which sued the SEC in April, alleged that the regulator was investigating whether Ethereum, post-merge, might be considered a security. The SEC’s letters did not agree with any factual statements or legal conclusions expressed by Consensys’ attorneys regarding ETH’s status as a security, despite the SEC’s approval of certain spot ether exchange-traded fund application filings.

The decision to end the investigation without recommending enforcement action brought relief to Consensys and positively impacted the ether market. Investors interpreted the news as a sign of reduced regulatory risk for Ethereum.

The closure of the SEC investigation is a significant milestone for Consensys and the broader Ethereum community. Jez Mohideen, CEO of Laser Digital, emphasized the importance of regulatory clarity for the industry, stating, “We have always been committed to upholding the highest standards of compliance and regulations.”

The positive outcome for Consensys reinforces confidence in Ethereum’s regulatory standing and future developments. It also highlights the ongoing dialogue between blockchain companies and regulatory bodies to navigate the evolving landscape of digital assets.