Crypto Leaders Rally Behind Consensys In Challenge Against SEC Regulatory 'Overreach'

Blockchain software tech company Consensys has taken legal action against the U.S. Securities and Exchange Commission (SEC) for its "reckless approach" toward the blockchain sector that could have a significant effect on the Ethereum network and community.

Consensys, which allows cryptocurrency holders to interact with decentralizing applications (dAPPs) built on the Ethereum blockchain, said in a Friday blog post that the complaint marks a critical step "towards preserving access to the Ethereum blockchain, and by extension, permissionless innovation."

The Fort Worth-based blockchain firm noted that it had two "very basic reasons" for taking legal action against the SEC. The first reason was to prevent the regulator from arbitrarily expanding "its jurisdiction to include regulating the future of the internet." As for its second reason, it said the regulator's "reckless approach is bringing chaos to developers, market participants, institutions, and nations who are building or already managing critical systems running on Ethereum."

Its filing came over a month after reports emerged that the SEC was investigating the Ethereum Foundation, the nonprofit that oversees the development and governance of the popular blockchain network. Companies working with the network were reportedly required to furnish documents and financial statements related to their dealings with the Ethereum Foundation.

Following Consensys' announcement of the action against the SEC, some of the crypto space's most prominent figures took to X (formerly Twitter) to support the blockchain firm's battle.

Hayden Adams, founder of decentralized finance (DeFi) protocol Uniswap, thanked Consensys and its founder, Joseph Lubin, for defending the industry. "We're tired of the overreach and harassment," he wrote.

Uniswap recently received a Wells Notice from the SEC. At the time of the notice's arrival, Adams said the on-chain marketplace was prepared to fight against the SEC, as he was confident that Uniswap products are legal and "on the right side of history."

Adams isn't the only crypto figure who expressed support for Consensys. Paul Grewal, chief legal officer at crypto exchange behemoth Coinbase, said it was time for the regulator "to admit that it still knows ETH (the native cryptocurrency of the Ethereum network) is a commodity." Like Adams, Grewal also said he was thankful for Consensys' decision to stand up "against the SEC's unlawful expansion of authority."

Coinbase is currently embroiled in a legal battle with the regulator, as it faces a lawsuit accusing it of violating securities laws by acting as an unregistered broker and digital asset exchange. A district judge has rejected Coinbase's attempt to dismiss the complaint, which means the case will proceed to trial.