ConsenSys Suffers Setback in Lawsuit Against SEC as Judge Dismisses Case Targeting Ethereum 2.0 Probe

ConsenSys, the blockchain company behind Ethereum ETH/USD infrastructure projects like MetaMask, has faced a setback in its lawsuit against the U.S.

Blockchain company ConsenSys, the driving force behind Ethereum (CRYPTO: ETH) infrastructure projects like MetaMask, has hit a roadblock in its lawsuit against the U.S. Securities and Exchange Commission (SEC).

Here's a quick rundown of what happened:

ConsenSys initially sued the SEC for overreach, alleging that the regulator was conducting an unnecessary investigation into Ethereum, particularly targeting Ethereum 2.0.

The company filed the lawsuit earlier this year in an attempt to clarify that ether, the native token of the Ethereum blockchain, should not be classified as a security.

However, a Texas judge has now ruled that the ConsenSys lawsuit is essentially moot because the SEC has already dropped its Ethereum probe.

In his decision, Judge Reed O'Connor of the U.S. District Court for the Northern District of Texas explained that "because withholding consideration subjects plaintiff to scant, if any, hardship, the claim lacks a ripe case or controversy.”

ConsenSys, in a post on X (NYSE:TWTR) (formerly Twitter), highlighted this development, celebrating the SEC dropping its 'Ethereum 2.0' investigation after ConsenSys filed its lawsuit and adding that the Texas court "recognized that the SEC already gave ConsenSys the relief it sought on that critical issue for the Ethereum ecosystem."

This ruling comes after the SEC quietly closed its Ethereum investigation earlier this year.

The SEC has not officially commented on the judge's decision or the case's dismissal, but the outcome does raise concerns within the blockchain industry about regulatory overreach.

ConsenSys maintained that their lawsuit "laid bare the overzealous investigation of Ethereum," echoing broader unease over the SEC's aggressive approach to blockchain software development.

Initially, ConsenSys sought legal recognition that ETH is not a security and that its flagship product, MetaMask, does not operate as a broker under federal law.

The company also argued that its staking services did not violate securities regulations.

But while the Ethereum investigation was dropped, the SEC followed up with charges in June, accusing ConsenSys of operating MetaMask as an unregistered securities broker.

The SEC has been tight-lipped about Ether's legal status, but the regulator did reach a settlement with trading platform eToro earlier this year, allowing it to continue listing ETH in the U.S.

These issues, the future of Ethereum, and other crypto projects will be up for discussion at Benzinga's upcoming Future of Digital Assets event on November 19, where

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