Ethereum Co-Founder Blasts SEC While Laying Off 20% of Staff

(Bloomberg) -- Consensys, a software provider for the Ethereum network being sued by the SEC, blamed regulatory uncertainty caused by the agency in part for its decision to eliminate 162 positions, or 20% of its workforce. 

Headed by one of Ethereum’s co-founders, Joseph Lubin, the New York-based company cited broad macroeconomic conditions as well. Ether, the native token of the network, is the second-largest cryptocurrency by market value after Bitcoin.  

“Multiple cases with the SEC, including ours, represent meaningful jobs and productive investment lost due to the SEC’s abuse of power and Congress’s inability to rectify the problem,” Lubin wrote in a blog post Tuesday.    

Consensys operates the popular crypto wallet MetaMask, as well as provides a slew of blockchain tools and products. The company, which cut around 11% of its workforce at the start of 2023, has been in regulatory crosshairs this year. 

In April, Consensys disclosed it received a notice from the SEC that the regulator could bring an action against the company related to its MetaMask products. That same month, the company sued the SEC in an effort to fend off regulation of the Ethereum blockchain and push back against the agency. 

In late June, the SEC said Consensys broke its rules when it failed to register as a brokerage and improperly collected millions of dollars in fees. The SEC said that since 2020, Consensys brokered more than 36 million crypto transactions, including at least 5 million that were securities.

This year also marked the debut of crypto exchange-traded funds in the US, which was considered a watershed moment for the digital-asset industry. The Bitcoin funds, approved in January, have seen stronger demand than the ones holding Ether approved in July. Ether has gained about 16% this year, compared with a more than 70% jump in Bitcoin. 

Investment products holding Ether saw outflows of $35 million last week — the largest of any digital asset during the period, according to data compiled by CoinShares.  

--With assistance from Olga Kharif.

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