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SEC closes investigation into Ethereum studio Consensys

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Ethereum fans can breathe a sigh of relief.

The US Securities and Exchange Commission (SEC) has officially closed its investigation into the blockchain ecosystem.

Ethereum development studio Consensys shared the news about X overnight.

“Today, we are pleased to announce a major victory for Ethereum developers, technology providers, and industry participants: The SEC’s Enforcement Division has notified us that it is closing its investigation into Ethereum 2.0,” the company wrote.

“This means that the SEC will not bring charges alleging that the sales of ETH were securities transactions.”

Hints of an SEC investigation into Ethereum and companies supporting the protocol began circulating in March, when Fortune reported that the agency was investigating three unnamed affiliated companies for possible securities violations.

Consensys sued the SEC a month later, claiming the regulation was overreaching. The suit alleged that Chairman Gary Gensler tried to gain power over the crypto space by using legal maneuvers to force ETH into a securities definition after it switched to Proof of Stake in September 2022.

In part of those filings, it was disclosed that Consensys had received a Wells notice from the SEC expressing the agency’s intent to file suit. The Fort Worth-based company, which owns popular Web3 infrastructure including crypto wallet MetaMask and API provider Infura, was founded by Ethereum co-founder Joe Lubin.

The SEC’s investigation was expected to be closed following the approval of a number of spot ether ETFs last month, but the formal notification removes one of the biggest existential threats to cryptocurrencies, at least for now.

Former SEC Chairman Jay Clayton had initially supported SEC Director of Corporation Finance William Hinman’s view that Ether ceased to be a security in 2019 because there was no central entity controlling the cryptocurrency at the time. However, the agency had not made an official statement, and Gensler appears to have since walked back that view.

On Wednesday morning, Alexander Grieve, head of government affairs at venture capital firm Paradigm, tweeted a copy of the SEC’s letter to Consensys, saying:

“This letter is to inform you that we have completed the investigation into the (Ethereum 2.0 matter) … based on the information available to us to date, we do not intend to recommend that the Commission take any enforcement action against your client, Consensys Software Inc., in relation to this investigation.”

The letter added that the notice was made in accordance with the guidelines of the Securities Act, and that it “should not in any way be construed as exonerating the party or as suggesting that the employee investigation will ultimately be without result.”

All good news for Consensys, but other legal threats to cryptocurrencies continue to loom. So far, there is no information that the SEC’s Uniswap investigation will be closed, although no lawsuit has been filed yet.

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