This lawsuit follows a series of interactions between the company and the SEC. The SEC originally sent the company a notice that it was opening an investigation related to the classification of Ethereum. The company then sued the agency arguing that the SEC was seeking to regulate ETH as a security.  A few weeks ago, the company announced that the SEC notified it that they were closing the investigation into Ethereum and would not pursue an enforcement action against the company.…

If NFTs are treated as financial products, they are subject to criminal enforcement on traditional fraud theories. While the report is titled "Illicit Finance Risk Assessment," it also discusses other concerns separate from fraud. It mentions how NFTs could be offered and sold as securities and highlights two prior SEC enforcement actions with respect to NFTs. (See .) These enforcement actions drew wide criticism and a harsh dissent from two SEC Commissioners.

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The SEC's stance on crypto regulation continues to be a point of contention. While the agency staff frequently encourages engagement, they stop short of offering any assurances that such cooperation will shield participants from potential enforcement actions. This approach adds to the argument that as to crypto, the SEC is regulating by enforcement. The unfortunate result is that the ultimate shape of crypto regulation may be forged through judicial decisions rather than SEC rulemaking or…

If the SEC officially declared ETH to be a security, it would have significant implications for the entire crypto industry, affecting projects, investors and overall market dynamics. Numerous businesses have been built based on regulatory precedent that ETH is not a security. Further, if the SEC truly believes that ETH is a security, then it should have taken a proactive stance years ago and provided clear guidance to the industry. Choosing silence and leaving the industry to interpret the…