The Ethereum blockchain, which supports billions of dollars of trading in games, tokens, art and the ether currency, has cleaned up its act
For launching a probe into the Ethereum blockchain over its status as a security then weeks later refusing to directly designate Ether as a security during a Congress hearing, the crypto community wants the SEC and its chair Gary Gensler to be held accountable. AFP

KEY POINTS

  • The Committee said Tuesday that designating ETH as a security at this point contradicted the SEC's previous statements
  • Crypto users demand action, not words in holding Gensler and the agency accountable for misleading statements
  • Consensys' filing revealed that the SEC approved a probe into Ethereum over its status as a security

The U.S. Securities and Exchange Commission (SEC) and its chair Gary Gensler are in hot waters following the revelation by blockchain tech firm Consensys that the regulatory agency already deemed Ether (ETH) as a security since last year but did not inform Congress when asked during a House Committee on Financial Services hearing.

On X (formerly Twitter), the general reaction of cryptocurrency users, enthusiasts, and experts alike has been more demanding that Gensler and the Wall Street regulator be held accountable for "misleading" statements. Even the Committee that asked Gensler about the SEC's stance on Ether called out the regulator.

"Classifying #ETH as a security contradicts previous statements of the SEC and Chair Gensler," the Committee said, attaching the statement of Committee chairman Rep. Patrick McHenry, R-N.C., wherein he said Gensler "misled Congress."

Consensys' said in its latest filing to prove that Ether – the native cryptocurrency of the Ethereum network – isn't a security, that the SEC approved an investigation into Ethereum and companies doing business with the decentralized blockchain late in March 2023 over ETH's status as a security. Weeks later, Gensler appeared before the Committee and did not clarify whether the SEC believed ETH was a security.

McHenry said the revelation was "yet another example of the arbitrary and capricious nature of the agency's regulation by enforcement approach to digital assets."

Now, the crypto community is piling pressure on lawmakers to actually hold Gensler and the regulatory agency accountable for their misleading views regarding Ether in the crypto space.

Former Google software engineer Sean McBride questioned the Committee about what it has done so far to hold the agency or its chair accountable. "Gensler is left to parade around D.C. like he owns all of you. #AllTalkNoAction," he wrote.

One user said the Committee has "accomplished nothing" while the regulator has been stepping up its "attack on crypto." Genesis council member at layer-0 blockchain Vitreus Chain, Jaren, reiterated that "actions matter, not words."

"If Congress doesn't act, you are all just as guilty," said another crypto user. At least one user asked if losses from the SEC's "overreach" can be claimed.

Several other notable figures in the digital assets space have also weighed in on the matter, including prominent attorney Fred Rispoli and crypto author Tony Edward.

Meanwhile, McHenry has since announced a May 7 hearing of the Committee's Subcommittee on Capital Markets entitled "SEC Enforcement: Balancing Deterrence with Due Process." It remains to be seen how the latest development will affect next week's hearing and whether Gensler will be questioned over the Ether issue.

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