A United States appeals court has supported a California federal judge’s dismissal of Hodl Law’s lawsuit against the SEC. The lawsuit aimed to force the SEC to clarify its classification of Ethereum, but the court found no valid basis for the claim. This decision reinforces the SEC’s position on the issue, leaving the legal status of Ether unresolved.
Appeals Court Dismisses Hodl Law Ethereum Suit
The Ninth Circuit Court of Appeals ruled that Hodl Law failed to demonstrate any realistic danger of SEC enforcement. The court noted that the law firm did not present evidence of the SEC investigating or threatening action against its use of Ethereum. Consequently, the panel agreed with the lower court’s decision to dismiss the case, citing a lack of “final agency action” by the SEC.
Hodl Law had filed the lawsuit in November 2022, seeking clarification on whether Ether should be classified as a security. The firm argued that without this clarity, it risked violating securities laws through its use of Ethereum. However, the court found that the SEC had not taken any definitive action that would require such a ruling, and therefore, Hodl Law‘s concerns were speculative.
Appeals Court Declines Ether Security Ruling
The appeals court emphasized that the SEC is not obligated to provide specific rulemaking or respond to private parties’ requests for guidance. This finding further weakened Hodl Law’s case, as the firm could not identify any legal requirement for the SEC to clarify Ether’s status. The court also noted that the SEC has not determined whether Ether or assets on the Ethereum blockchain are securities.
Hodl Law’s complaint argued that if the SEC were to classify Ether as a security, it would already be in violation of securities laws. Despite this argument, the court maintained that there was no immediate threat or action from the SEC warranting judicial intervention. As a result, the court dismissed the case, upholding the July 2023 decision of the California district court.
Despite the court’s ruling, Hodl Law’s senior managing partner, Fred Rispoli, expressed disappointment but remained resolute. Rispoli stated that the firm is not giving up and will explore other legal avenues to force the SEC to clarify Ether’s status. He criticized the court’s decision, arguing that it failed to uphold the rule of law in the United States.
Well, @hodl_law lost in the 9th Circuit today. Disappointing but expected if you caught the oral argument (and thank you, with my entire heart, if you did).
All we wanted was for the court to give us a chance to argue #ETH #Ethereum is not a federal security. The 9th Circuit… pic.twitter.com/KlbQWIb31v
— Fred Rispoli (@freddyriz) August 22, 2024
The SEC has yet to make a definitive ruling on whether Ether or Ethereum-based assets are considered securities. The appeals court acknowledged that the SEC may never make such a determination, leaving the matter unresolved. Hodl Law intends to pursue further legal action to obtain a clear answer from the SEC.
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