Who caused the SEC to drop the Ethereum lawsuit and why is Gary Gensler still targeting Ripple (XRP)?

• The SEC has closed its investigation into Ethereum, deciding not to pursue accusations that ETH sales were securities transactions.
• The XRP community is outraged, accusing the SEC of double standards and biased treatment.

The United States Securities and Exchange Commission (SEC) has officially closed its investigation into Ethereum, marking a significant triumph for developers, technology providers and industry players in the cryptocurrency sector. This decision follows a series of regulatory challenges and a lawsuit filed by Ethereum developer Consensys.

SEC ends investigation into Ethereum 2.0

Consensys announced Tuesday that the SEC’s Enforcement Division has concluded its investigation into Ethereum 2.0 without bringing any charges. The company shared the news on Twitter, emphasizing that the SEC would not act on allegations that ETH sales constituted securities transactions. This development follows the SEC’s approval of Ethereum spot ETFs last month, a move that Consensys says underscores ETH’s status as a commodity rather than a security.

Laura Brookover, an attorney for Consensys, posted the SEC notification letter and the company’s official statement on Twitter. She highlighted rapid changes since Consensys filed a complaint against the SEC in April, celebrating the end of the investigation after more than a year of review. However, the SEC correspondence included boilerplate language rejecting that the closure of the investigation should not be construed as an exoneration.

Consensys’ legal battle with the SEC

In April, Consensys took a proactive stance by filing a lawsuit against the SEC. The lawsuit argued that the SEC was trying to assert control over the future of cryptocurrency and planned to classify Ethereum as a security. Consensys revealed that the SEC had decided Ethereum’s status internally a year prior, triggered by a Wells opinion related to Consensys’ MetaMask wallet.

Despite the closure of the Ethereum investigation, Consensys remains engaged in its legal battle. The company requests a declaration that its MetaMask Swaps and Staking services do not violate securities laws. Consensys emphasized that regulatory clarity is essential for growth and innovation within the blockchain industry and criticized the SEC’s approach to crypto regulation.

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Former SEC regulator Christopher Gerold commented on the situation, emphasizing that while the closure of this investigation is important, it does not preclude future regulatory action. He pointed out that the SEC has the power to file charges anywhere in the country, suggesting that the legal landscape for Ethereum and other cryptocurrencies remains uncertain.

Unequal treatment of Ethereum and Ripple

Bill Morgan, a prominent member of the XRP community, and several analysts have expressed their displeasure, accusing the SEC of inconsistent regulatory practices. Morgan argues that the SEC’s leniency toward Ethereum, particularly as approval of a spot ETF nears, illustrates a double standard.

THE The frustration of the XRP community comes of what he considers to be biased treatment by the SEC. Morgan pointed out that the SEC’s recent letter to ConsenSys, clarifying the status of Ethereum, contradicts its aggressive stance against Ripple. It claims that token classification criteria remain ambiguously applied, leading to regulatory uncertainty and uneven enforcement.

The rapid resolution of Ethereum’s status stands in stark contrast to the protracted investigation into Ripple, prompting scrutiny of regulatory consistency and potential underlying influences. THE The SEC’s Regulatory Approach remains under critical review.

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