Appeals Court Sides with SEC, Rejects Crypto Law Firm’s Bid for Ether Clarity
Harvey Hunter is a Junior Content Creator at Cryptonews.com. With a background in Computer Science, IT, and Mathematics, he seamlessly transitioned from tech geek to crypto journalist.
A US appeals court has upheld a California federal judge’s decision to dismiss a pre-emptive lawsuit filed by crypto-focused law firm Hodl Law against the SEC.
The lawsuit sought to compel the US Securities and Exchange Commission (SEC) to clarify its Ethereum (ETH) classification as a security.
Hodl Law’s November 2022 complaint was rejected by the San Diego district court, which found that the firm failed to demonstrate a “realistic danger” of facing SEC enforcement action merely for using the Ethereum blockchain and Ether.
On August 22, the Ninth Circuit Appeals Court panel affirmed this decision.
“Hodl Law’s complaint contains no allegations that the SEC has investigated, prosecuted, or threatened to investigate or prosecute the law firm’s use of Ether or Ethereum,” the three-judge panel wrote in an unpublished opinion.
Hodl Law hoped that the suit would force the SEC’s hand to clarify its stance on Ethereum’s classification. This was part of a broader effort to address enforcement actions against crypto firms, which have implicated numerous cryptocurrencies under securities laws.
“If the SEC determines that transactions involving Ether or the Ethereum network violate the Securities Act, Hodl Law would already be in violation of the law because it currently engages in such transactions as part of its law practice,” the panel wrote.
The appeals court upheld the California court’s decision to dismiss the case, ruling that Hodl Law did not provide sufficient evidence that “allege that either Ether is a security, or that the transaction on the
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