SEC Boss Has Long Viewed Ethereum as a Security, New Filing Reveals

According to an unredacted version of Consensys’s lawsuit against the U.S. Securities and Exchange Commission, SEC Chair Gary Gensler viewed Ethereum, the second-biggest cryptocurrency, as an unregistered security a year ago. 

Gurbir Grewal, who is currently serving as the Director of the Division of Enforcement for the SEC, greenlit a formal probe into Ethereum’s security status back in March 2023. The investigation involved sending subpoenas to various individuals and entities that have dealt with the Ethereum token. 

The Fox Business report says that the SEC was adamant about making sure that the investigation remained a secret, with one source comparing their experience to being forced to sign a nondisclosure agreement. The parties that received the subpoenas were supposed to remain mum about them if they wanted to get further information about the probe.  

Unsurprisingly, Consensus, the key Ethereum backer, was among the firms that had to deal with subpoenas from the SEC.  

After filing its lawsuit against the SEC, Consensys revealed that it had received a Wells notice from the regulator earlier this April. 

As reported by U.Today, SEC Chair Gary Gensler has repeatedly refused to answer whether or not Ethereum is an unregistered security. He also dodged this question from Congressman Patrick McHenry during a congressional hearing back in April 2023. Notably, the SEC voted to approve the investigation into Ethereum just days after the hearing took place. 

The SEC’s hostile stance toward Ethereum does not come as a surprise. In a recent interview with New York Magazine, the SEC boss hinted that the token could be classified as an unregistered security. 

Gensler previously recognized Ether as a non-security during his MIT days, but Ethereum’s long-awaited transition to the proof-of-stake consensus mechanism likely dramatically altered his view. 

However, ETF analyst Nate Geraci seems to be confused by the SEC’s approval of Ethereum futures ETFs.  “Why did they approve eth futures ETFs then? Seems like that was implicit acceptance that eth = non-security commodity,” he wrote on the X social media platform.