The legal dispute between the U.S. Securities and Exchange Commission (SEC) and the crypto sector is escalating. Consensys is filing a lawsuit against the SEC in a Texas court. "The SEC's wrongful admission would be a disaster for the Ethereum network and for Consensys," the claim reads.

This is designed to avoid a lawsuit from the other party. The SEC, in turn, plans to sue Consensys. This is according to a so-called Wells Notice, which Consensys has received. At issue are certain features of the MetaMask Wallet operated by Consensys that the SEC says are illegal.

But the case is even bigger. At the heart of the case is whether Ethereum is a security under U.S. exchange laws. Consensys is now asking the court to clarify this issue with legal certainty.

A Consensys blog post reads:

"We took this step for two fundamental reasons: (1) the SEC should not arbitrarily expand its jurisdiction to regulate the future of the Internet; and (2) the SEC's reckless approach is creating chaos for developers, market participants, institutions and nations that are building or already operating critical systems on Ethereum, the world's largest platform for decentralized applications."

Consensys thus argues that the SEC is overstepping its jurisdiction with its actions against the crypto sector. Staking, in particular, is a thorn in the SEC's side. Unlike Bitcoin, the ability to earn rewards by deploying tokens is a feature of a security. In contrast, Joe Lubin, founder of Consensys, argues that staking is merely a pledge of a security and does not transform Ethereum into a security.

Recently, the Securities and Exchange Commission also put a stop to Ethereum ETFs, postponing decisions until May.