Consensys founder Joe Lubin says US regulators ‘were asleep at the wheel’

Consensys founder Joe Lubin said U.S. regulators “were asleep at the wheel” while speaking at the Ethereum Community Conference in Brussels on Wednesday, adding that certain Senators and a banking lobby were able to “opportunistically” come in and guide SEC policy on crypto. 

“They worked with Chair Gensler to say, 'Hey, let’s use these nearly 100-year-old laws and expand your jurisdiction and just control this new technology so that we can essentially fold it into the current infrastructure’ and big banks and big finance can continue to operate and maybe create a dumbed-down version of decentralization,” Lubin said.

Lubin also said that he and others had been forced to deal with unclear legislation. 

“For years, we’ve been used to operating under a dark cloud of regulatory uncertainty,” Lubin said. 

Lubin discussed current SEC chair Gary Gensler, claiming Gensler previously said that Ether was not a security. 

“During his tenure at MIT, he said 75% of these tokens are not securities. Ether is not a security,” Lubin said. 

Lubin added that Gensler asked “Congress for a mandate to regulate this new technology because he didn’t have a mandate to regulate the technology.” 

Looking forward, the upcoming U.S. elections “have really opened things up,” Lubin said, adding that legislators are now seeking new ways to win votes and raise capital for their campaigns.

“We’re making real headway, and we’re much less fearful, we’re going forward, and I think there’s going to be a lot less friction going forward in the U.S.,” Lubin added.

Consensys sued the SEC on April 25, alleging that ether bears “none of the attributes of a security” and would thus fall outside the SEC's jurisdiction. In that complaint, Consensys revealed that they received a Wells notice from the SEC, indicating that the agency had plans to bring an enforcement action against them.

The SEC sued Consensys on June 28, alleging that the company’s in-house wallet, MetaMask,  violated several laws . Specifically, MetaMask’s “swaps” feature, which enables users to exchange one token for another, made it an unregistered broker. 

Additionally, the SEC claimed that MetaMask’s staking service, which offered an easy way to interact with liquid staking protocols, including Lido and Rocket Pool, should be classified as an unregistered securities program. 

On July 2, a Texas judge approved an expedited process for the SEC proceedings against Consensys. Proceedings will occur between July 29 and November 26, suggesting that a decision in the case could come by the end of the year or early 2025.