MetaMask developer Consensys has filed a lawsuit against the U.S. SEC challenging the agency’s attempt to label Ethereum (ETH) as a security. Consensys argues that the SEC’s approach is reckless and could hinder innovation in the crypto space.

The legal document, disclosed on April 25, emphasizes that the SEC’s actions could have far-reaching consequences, impacting stablecoin policy and driving technological advancement outside the U.S. borders. Consensys views the SEC’s regulatory overreach as counterproductive and harmful to the original purpose of the watchdog.

The lawsuit from MetaMask’s creator comes in response to the SEC’s increased litigation efforts against the crypto industry. The SEC has requested an additional $158 million to regulate the digital asset ecosystem, which it has referred to as the “wild west.”

Moreover, the lawsuit is a reaction to a Wells Notice issued against Consensys, suggesting that MetaMask may be operating as an unregistered broker-dealer entity. The crypto industry as a whole is rallying against investigations targeting organizations like the Ethereum Foundation, dedicated to enhancing ETH’s ecosystem.

Stakeholders, including Coinbase and Kraken, are challenging the SEC in court, arguing that the agency has failed to provide clear guidelines for the evolving crypto market. Despite the regulatory challenges, industry proponents and dissenting SEC Commissioners like Hester Peirce continue to advocate for a more transparent regulatory framework.

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