A U.S. district judge has dismissed a case brought against the Securities and Exchange Commission by blockchain and web3 development company Consensys Software Inc.
Judge Reed O'Connor in the U.S. District Court for the Northern District of Texas in the Fort Worth Division dismissed Consensys' claims and sided with the SEC on Thursday.
“For the reasons stated above, Defendants' Motion to Dismiss Plaintiff's ETH claims is GRANTED, and Counts I, II, and III are DISMISSED AS MOOT,” Judge O'Connor wrote. “Plaintiff concedes it is not pursuing an APA claim under Count IV. Finally, Defendants' Motion to Dismiss Plaintiff's MetaMask for lack of subject matter jurisdiction is hereby GRANTED. Accordingly, this action is dismissed without prejudice.”
Consensys sued the SEC in April, in part over how the agency categorized ether as a security. Consensys said the SEC has decided that ETH is a security and said the agency has “trained its sights” on the firm's Metamask software. The firm also noted in the complaint that SEC staff sent Consensys a Wells notice in April, meaning a formal notice that the agency plans to bring an enforcement action against them.
However, later in June, Consensys said it was notified that the SEC was closing its investigation into Ethereum, which at the time was described as a “major win” for the industry. Consensys said it still planned to continue the lawsuit because it was also looking for a “declaration that offering the user interface software MetaMask Swaps and Staking does not violate the securities laws.”
Then, in July, the SEC sued Consensys over its failure to register as a broker through its Metamask swaps service. That lawsuit was filed in the U.S. District Court for the Eastern District of New York.
Judge O'Connor said none of the SEC's actions regarding MetaMask were “final.”
“Because Plaintiff has not identified final agency action that would render the claim fit for judicial review and because withholding consideration subjects Plaintiff to scant, if any, hardship, the claim lacks a ripe case or controversy,” the judge wrote. “Defendants' Motion to Dismiss Plaintiff's MetaMask claim on ripeness grounds is GRANTED.”
Consensys said it would “keep fighting for the rights of blockchain developers” in its case with the SEC in New York.
“Outside of court, we have also seen signs of what could be a momentous step change in Washington's sentiment towards cryptocurrencies and digital assets during a crucial period for U.S. politics,” the firm said in an emailed statement. “We are on the right path, but must remain vigilant.”
The SEC declined to comment.
Update: Sept. 19, 10:15 p.m. UTC to include comment from Consensys
Update: Sept. 20, 3:45 p.m. UTC to include the SEC's decline to comment