Gary Gensler Believes Second-Largest Crypto Ethereum is Unregistered Security: Consensus Lawsuit

FOX Business’ Charlie Gasparino has exposed new insights regarding SEC chair, Gary Gensler, and his beliefs about Ethereum. According to an unredacted complaint filed by software company Consensys in response to a Wells notice received from the agency last week, Gensler believed for at least a year that second-largest cryptocurrency Ethereum was trading out of compliance with federal securities laws because it’s classified as an ‘unregistered security’. This revelation sheds light on what has been a significant question facing the $2 trillion digital asset industry regarding the regulatory status of a crypto held by millions of investors. The SEC spokesperson declined to comment, but sources familiar with the matter revealed that subpoena recipients were instructed to keep investigations secretly in 2018 as Gensler authorized enforcement staff to investigate and subpoena individuals involved in buying or selling Ethereum tokens. Consensus received a similar subpoena around this time alongside other firms linked to Ethereum’s blockchain founder, Joe Lubin. This investigation was based on the SEC’s belief that potential unregistered offerings and sales of Ethereum occurred since 2018. If Gensler classifies Ethereum as a security, it would contradict former chairman Jay Clayton’s guidance in June 2018 when he stated at an event hosted by Yahoo Finance All Markets Summit that Bitcoin alongside Ether was not classified under securities regulation since both cryptocurrencies were ‘sufficiently decentralized’. Consensys, which established one of Ethereum’s blockchain founders, Joe Lubin, hopes the court will ultimately settle this dispute over Ethereum’s regulatory status.