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Ethereum co-founder Joe Lubin has argued that the U.S. Securities and Exchange Commission's recent series of enforcement actions directed at crypto firms is "intended to create FUD"—that is, "fear, uncertainty, and doubt"—in the industry.
Speaking at the Financial Times Crypto and Digital Assets Summit, Lubin, whose firm Consensys recently revealed that it was sent a Wells Notice by the regulator, called its action "an attempt to paralyze us, or have us move off-shore."
The regulator had, Lubin claimed, reclassified Ethereum as a security, "without really telling anybody that that's the case." He added that Consensys' filing of a preemptive suit against the SEC is "about getting clarity from U.S. courts," to establish that Ethereum is a commodity, "as many in the SEC and the CFTC have been stating for years."
Over the past year, the SEC has launched a series of enforcement actions targeting crypto firms including Coinbase and Binance. The regulator has also sent Wells Notices warning of impending enforcement action to firms including Consensys (disclosure: which is one of 22 investors in Decrypt), Robinhood and Uniswap Labs.
As part of those actions, Lubin said, the SEC has claimed that crypto wallets such as MetaMask are acting like broker dealers, which he called "a preposterous notion," questioning whether Consensys or individual users should register the "piece of software that anybody can download and run on their own" as such.
The regulator had also made what Lubin called the "bizarre" claim that Consensys is helping firms such as Lido and Rocket Pool issue securities by providing "access to some decentralized finance protocols on Ethereum."
Lubin added that the SEC is currently inspecting the GitHubs of software developers who are "building out the deeper layers of the protocol," rather than being engaged in financial matters—an action he called "chilling for software developers."
The SEC and Ethereum ETFs
He also pointed to the "interesting" timing of the SEC's actions, ahead of the regulator's May 23 deadline for approving or denying applications for a U.S. spot Ethereum ETF. Lubin suggested that the regulator was engaging in a "flurry of activity designed to enable them to say that their action wasn't capricious," in the "likely event" that it denies the approval of spot Ethereum ETFs.
The Consensys founder argued that the SEC "probably doesn't want to see a wave of innovation" in the financial landscape resulting from the approval of spot Ethereum ETFs, and the prospect that "many of the banking industry's customers will move their assets into digital form" and DeFi applications.
"That'll be really uncomfortable for certain factions in the U.S. who would prefer to slow it down or shut it down," he said.
Nevertheless, Lubin remained optimistic at the prospects of a spot Ethereum ETF eventually being approved, pointing to an "inflection point" in 2025, "when the courts force the SEC to approve the spot ETFs."
Edited by Andrew Hayward