Ethereum Co-Founder: SEC’s Manipulative Tactics Demand Crypto Industry’s Uprising!

Joe Lubin, co-founder of Ethereum, is taking legal action against the U.S. Securities and Exchange Commission (SEC). Lubin argues that the future of the internet is at stake.
In the battle with the SEC, Lubin emphasizes that the financial regulatory agency is not only at war with Ethereum, but also attempting to influence the direction of the entire internet. As a result, Lubin has decided to fight back.
Lubin has been a member of the Ethereum founding team since 2015. Ethereum is the underlying network of the world’s second-largest cryptocurrency, Ether (ETH). Later that year, Lubin founded Consensys to support and promote the development and application of Ethereum and build more software products on the Ethereum network. However, in April of this year, Consensys received a Wells Notice, a warning letter from the SEC, indicating that the company would face legal action.
According to sources, the regulatory agency’s dissatisfaction with Consensys focuses primarily on its software product called MetaMask. MetaMask is a cryptocurrency wallet that allows users to securely store cryptocurrencies and easily interact with Ethereum-based applications.
Consensys points out that, according to the SEC’s notice (which has not yet been made public), the SEC claims that Consensys has essentially become an unregistered securities broker-dealer due to the existence of MetaMask. Specifically, the SEC questions two functions of MetaMask: the token exchange service it provides that allows users to trade between different tokens, and the “staking” function that allows users to lock tokens to earn periodic rewards.
On April 25th, Consensys filed a counterclaim against the SEC. The lawsuit accuses the regulatory agency of “illegally seizing jurisdiction over Ethereum” because Ethereum “does not possess any securities attributes” – securities being the type of financial instrument the SEC has jurisdiction over. Consensys claims that if the SEC succeeds, it “will cause catastrophic consequences for the Ethereum network.”
Consensys states that the SEC did not refer to Ethereum itself as a security in its Wells Notice, but rather focused on the functionality of MetaMask. However, according to Consensys, the SEC has been quietly investigating Ethereum for a long time and believes that Ethereum should be reclassified as a security.
Consensys firmly maintains that the SEC’s allegations are unfair because a senior official at the SEC previously described Ethereum as a commodity, not a security. The Commodity Futures Trading Commission (CFTC) also holds the same view. Consensys emphasizes that the company operates under this regulatory consensus.
Consensys hopes to clarify the SEC’s regulatory authority through this lawsuit in order to free itself and Ethereum from the SEC’s opposition. They aim to inspire the entire cryptocurrency industry to collectively oppose the SEC’s alleged “excessive and illegal” regulation.
The SEC spokesperson declined to comment on the charges raised by Consensys, but emphasized that “non-compliance with securities regulations deprives important investor protection measures, including rules against fraud and manipulation, appropriate disclosure of information, segregation of client assets, safeguards against conflicts of interest, supervision by self-regulatory organizations, and regular inspections by the SEC. Non-compliance with these regulations will ultimately harm investors and may cause losses to the U.S. financial market.”
In a recent interview with WIRED magazine, Joe Lubin discussed the potential impact of the SEC defining Ethereum as a security. He stated that it would have a significant deterrent effect on Ethereum users in the United States, as people would not be able to legally purchase it and software developers would not be able to continue developing Ethereum or creating new applications on the Ethereum protocol.
If U.S. regulatory agencies insist on acting in their own way, they may use extraterritorial jurisdiction to exert pressure on countries globally, thereby restricting users’ access to decentralized protocols and decentralized financial services.
Lubin expressed the need to stand firm on their principles and not be excluded by an irrational or reckless regulatory agency. The goal of the lawsuit is to hold the SEC accountable for its actions and encourage open dialogue and clear rule-setting rather than relying solely on enforcement actions.
Lubin also discussed the potential outcomes of the lawsuit, stating that the best result would be for Ethereum to be recognized as a commodity and for the SEC to approve an Ethereum Exchange-Traded Fund (ETF) by 2025. He believes that an Ethereum ETF would provide a channel for significant funds to enter the Ethereum ecosystem, similar to how a Bitcoin ETF has facilitated the influx of funds into the Bitcoin ecosystem. This would lead to more attention and the further maturation of decentralized finance (DeFi).
Lubin acknowledged that the lawsuit could last for several years, and during this time, the uncertainty could impact Consensys’ development. However, he stated that they have been dealing with regulatory uncertainties for a long time and will continue to do so until there is a clear ruling from the court or Congress.
Regarding the SEC’s interest in Ethereum’s upgrades during the previous summons, Lubin stated that there is a speculation that the SEC might view the upgraded Ethereum as a new financial instrument. However, he emphasized that the upgraded Ethereum network has significantly enhanced decentralization and security. The new consensus mechanism allows users to participate in network maintenance by staking Ethereum and receive rewards, which should be seen as a return or income for their contributions, rather than investment returns.
Lubin believes that the U.S. government and large banks see the current situation as favorable to them and have spent decades consolidating their power. The government and big banks do not want to see a world where people can directly participate in financial innovation. Therefore, the SEC’s actions are not just about power expansion but also a strategy to restrain or delay the development of this new technology.
Consensys faces the choice of either continuing to struggle in this regulated fog for years or taking independent action to expose the truth and bring clarity to the situation.