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Consensys to invest ‘tens of millions’ in lawsuit against SEC’s stance on Ethereum, says Joseph Lubin

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on May 30, 2024
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  • Lubin describes SEC's enforcement approach as "carpet bombing."
  • Lubin argues that the SEC's actions hinder operations and threaten the survival of smaller companies.
  • Consensys received a Wells notice in April 2024 and has since filed a lawsuit against the SEC.

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Consensys is ready to spend millions in a legal tussle with the United States Securities and Exchange Commission (SEC). According to CEO Joesph Lubin, the firm will fight for clarification over Ethereum’s definition.

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Speaking at a recent podcast appearance, the Ethereum co-founder doubled down on his support towards the second-largest cryptocurrency. He thrashed the SEC’s “regulate by enforcement” approach.

SEC is killing the ecosystem

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The criticism comes on the heels of the commission’s recent moves against some of the biggest names in the sector.

Back in June 2023, the SEC alleged that Coinbase was an unregistered national securities exchange. Soon after, it slammed payments firm Ripple with a $2 billion fine

The regulator claimed Ripple was offering unregistered securities.

Consensys itself isn’t any stranger to the SEC’s overreach, having received a Wells notice in late April 2024. The firm moved to sue the U.S. securities watchdog following allegations of operating as an unregistered broker-dealer.

Lubin revealed that Consensys is “secretly” raising “tens of millions of dollars” in that regard. Labelling the SEC’s current enforcement actions as “carpet bombing”, he stressed:

We’re all in. But we should think about the costs we’ve already incurred and the costs that our entire ecosystem keeps incurring.

According to the Ethereum co-creator, the SEC has been forcing companies to produce extensive legal documentation. This directly hinders their day-to-day operations.

Further, he pointed out that smaller companies also face a lot of difficulties when under the watchdog’s radar, adding:

It’s a really effective way of slowing or killing an ecosystem.

Regulators not willing to lose control

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He also criticized the commission for not settling down on Ethereum’s classification. Pointing fingers at SEC chairman Gary Gensler. He added that Gensler is “punishing” the entire Ethereum ecosystem in a way that suggests the regulator already considers Ethereum a security. 

Lubin has been vocal about Consensy’s stance on the SEC’s actions. Appearing earlier at the Consensus 2024 event, he asserted that the SEC was targeting blockchain companies because of their ability to disrupt their authority. 

Ethereum is an “existential threat” to those seeking complete control, the co-founder of Ethereum noted.

He referenced Donald Trump’s recent endorsement of cryptocurrencies and the recent judicial victories against the SEC. Lubin stated that cryptocurrencies have crossed “the chasm” into American politics.

However, he stressed that it is crucial that all parties “holding power currently” must be involved in the process.

Despite filing a lawsuit against the commission, Consensys has previously lauded the regulator for its approval of Spot Ether ETFs. The firm hailed the move as a step “in the right direction.”

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