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.
— Financial Services GOP (@FinancialCmte) April 30, 2024
Republicans will continue to hold the SEC accountable for its regulatory overreach that is stifling innovation, leaving consumers unprotected, and risking our national security. https://t.co/XohLYtp7EF
"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.
Gary Gensler/ The SEC secretly declaring Ethereum a security and purposefully not answering Congress' questions looks so much worse now:
— Zack Guzmán (@zGuz) April 29, 2024
April 13: The SEC approves Division of Enforcement's investigation into ETH
April 18: Gensler refuses to answer whether ETH is a security https://t.co/ftIRQpunAj pic.twitter.com/9eVd6NMzeY
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.
“Continue to hold the SEC accountable..” please tell me what you have done to this point to hold the SEC or Gary Gensler accountable? I’ll wait. Meanwhile retail investors continue to go unprotected and Gensler is left to parade around D.C. like he owns all of you.…
— Sean McBride (@seanmcbride16) April 30, 2024
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."
You guys have been talking about holding him accountable for months already, meanwhile the SEC has ramped up their attack on crypto. You’ve accomplished nothing.
— RANK 1 (@RANK1crypto) April 30, 2024
Calling them to a meeting doesn't feel like holding them accountable.
— Jaren | Vitreus DAO (@mrscryptorabbit) April 30, 2024
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.
This line from your release is inaccurate and/or misleading: "Committee Republicans will continue to hold Gary Gensler's SEC accountable for its regulatory overreach...."
— Fred Rispoli (@freddyriz) April 30, 2024
Respectfully, sir: How have you held it accountable in the first place? Genuinely want to know.
Please issue the subpoena and cut his budget.
— Tony Edward (Thinking Crypto Podcast) (@ThinkingCrypto1) April 30, 2024
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.
