- Last year, Hodl Law’s lawsuit against the US Securities and Exchange Commission (SEC) was dismissed for several reasons including the inability to demonstrate a direct controversy between the firm and the Commission.
- The latest report reveals that the law firm has challenged the dismissal decision with the oral arguments scheduled for July 18, 2024.
The US Securities and Exchange Commission (SEC) has over the years stepped up its attack on the crypto ecosystem, subjecting the likes of Ripple Labs, Coinbase, Binance, etc under the authority of the law. However, many institutions and key figures within the ecosystem have raised serious objections to this exercise with Hodl Law, a firm that prides itself in focusing on the “legal services for digital assets and cryptocurrencies,” suing the Commission for what it described as “years-long, purposeful delay, and obfuscation” to extend its regulatory reach over cryptos.
Background to the Dismissal of Previous Argument
Hodl Law argued in its lawsuit that the strategy adopted by the SEC does not give token-holders fair notice about the securities status of the coins. The law firm further cited the case involving ex-Coinbase employee, Ishan Wahi, to argue that SEC’s refusal to provide concrete guidance has led millions of Ethereum users including the law firm to be in constant demand for a Declaratory Judgment that Ethereum is not a security.
However, the SEC argued in a dismissal brief that the law firm has no constitutional standing because there is no live case between them and the Commission. It also stated blatantly that the court does not have jurisdiction under the Declaratory Judgment Act. To them, Hodl law’s so-called concern about future enforcement actions was purely speculative.
According to the brief, their concern lacked the specific harm required for legal standing, and the hypothetical risk associated with possible investigation did not justify a lawsuit. The Agency also argued that the law firm cannot claim a valid grievance under the Administrative Procedure Act since there is no final ruling to contest.
In response to this, the court took a decision last year to dismiss the case for the reason that Hodl Law could not demonstrate a direct controversy between itself and the SEC. The decision was also based on the grounds that the firm could not challenge the agency’s approach. After all, the SEC had not taken any concrete action against the firm.
Hodl Law Challenges the Dismissal Decision, Consensys Sues SEC
Interestingly, this dismissal decision has been challenged by the law firm with the 9th Circuit Court of Appeals scheduling the oral arguments for July 18, 2024.
With this happening, Consensys has also filed a lawsuit against the SEC over alleged regulatory overreach. Similarly to the stance of Hodl law, Consensys believes that SEC is attempting to reverse its previous stance that Ethereum is a commodity, not a security. In their case, Consensys has received a Wells Notice from the SEC, hinting at a potential action related to MetaMask’s swaps and staking features.
According to them, Ethereum does not have the centralized management that defines security. This appears in line with the recent statement of Coinbase’s Chief Legal Officer Paul Grewal, criticizing the Agency for classifying certain cryptos as securities and contradicting its previous admissions.
At press time, Ethereum was trading at $3000 after declining by 2% in the last 24 hours and 12.8% in the last 30 days.
