SEC Sued Over Ethereum: Prosecutors Say ETH Isn't a Security

A bitter legal fight between the crypto industry and the Securities and Exchange Commission grew more intense on Thursday as Consensys, a major backer of the Ethereum blockchain, took legal action. At the heart of the matter: whether Ethereum's native token, ETH, should be classified as a security.

Consensys Sues SEC, Claiming ETH is Not a Security

Consensys seeks to divert from an impending lawsuit by the SEC against them over the MetaMask Wallet. The 34-page legal filing features dramatic language arguing that the SEC’s actions are stifling innovation and harming the burgeoning crypto industry. This lawsuit directly challenges the SEC's authority over Ethereum, a cryptocurrency with a market capitalization of billions of dollars.

SEC Internal Debate: Did the SEC Ever Consider ETH a Security?

The lawsuit claimed that the SEC and its chairman, Gary Gensler, had believed ETH to be a security since early 2025, with the SEC’s Division of Enforcement allegedly preparing legal action based on that premise. However, recent developments suggest a potential shift within the SEC. While initial investigations suggested ETH might fall under securities laws, prosecutors are now reportedly stating that ETH is not a security. This apparent change of heart has fueled the lawsuit, with Consensys arguing that the SEC's inconsistent stance creates regulatory uncertainty.

Ether Price Reacts to the News

The price of ether ETH $2,412.87 rose after Consensys received letters from the U.S. Securities and Exchange Commission (SEC) saying the regulator had ended its investigation into Ethereum 2.0. This positive reaction underscores the market's sensitivity to regulatory developments concerning Ethereum. The outcome of this lawsuit could have significant implications for the future of ETH and the broader crypto market.