Consensys Suit Against U.S. SEC Dismissed by Texas Court

• A federal court in Texas decided Consensys' recent lawsuit against the Securities and Exchange Commission wasn't warranted, because it's underlying legal danger had ceased.
• Consensys is still in a legal battle with the U.S. securities regulator over MetaMask.

The U.S. Securities and Exchange Commission had – for a time – added Consensys to a list of crypto investigation targets, prompting the technology incubator company to sue it for overreach in federal court. Because the regulator then shut down that Ethereum probe earlier this year, a Texas judge has decided the lack of immediate danger means the lawsuit is unwarranted.

Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas noted in a Thursday filing that "because withholding consideration subjects plaintiff to scant, if any, hardship, the claim lacks a ripe case or controversy." In other words, since there's no clear future threat to Consensys, there's no point in this judge weighing in.

"In a significant win for the industry, the SEC dropped its 'Ethereum 2.0' investigation after our litigation was filed, and the Texas court today recognized that the SEC already gave Consensys the relief it sought on that critical issue for the Ethereum ecosystem," the company said in a post on X.

Read More: SEC Ends Probe Into Consensys, Won't Sue Over Ethereum

Consensys argued that its lawsuit "laid bare the overzealous investigation of Ethereum, and policymakers and the public at large voiced deep concern over the SEC’s investigation of blockchain software development."

A spokesperson for the SEC declined to comment on the case being dismissed.

When Consensys sued the agency in April, it asked the court to declare that Ethereum's ether ETH$2,963.28 is not a security and that any investigation of ConsenSys based on the idea that the token is a security would trample on the company's rights. It also contended that MetaMask is not a broker under federal law and that its staking service doesn't violate securities law.

After backing down in the ETH investigation, the SEC did follow up with charges against Consensys later in June, alleging that the company's MetaMask service was acting as an unregistered securities broker.

While the SEC hasn't made a public statement about ETH's status, last week, the regulator settled charges with eToro which let the trading platform continue listing ETH in the U.S.

UPDATE (September 20, 2022, 18:16 UTC): Adds decline to comment from the Securities and Exchange Commission.