SEC sues Consensys over MetaMask services
Date: 2024-07-01 Author: Henry Casey Categories: IN WORLD
The US Securities and Exchange Commission (SEC) has filed a lawsuit against Consensys, the developer of the popular MetaMask crypto wallet, accusing it of violating securities laws. The case concerns the MetaMask Swaps and MetaMask Staking services, which, according to the regulator, were provided without the necessary registration.
In a complaint filed on June 28, 2024 in the Eastern District of New York, the SEC alleges that Consensys failed to register its services as a broker, a violation of securities law. The regulator says the company collected more than $250 million in fees for its services.
Claims to staking
One of the key points of the accusation is Consensys’ participation in the Lido and Rocket Pool staking programs. The SEC believes that by providing access to these programs, the company acted as an intermediary in unregistered transactions, depriving investors of needed protection. The regulator classifies staking programs as investment contracts, which requires mandatory registration.
The SEC is seeking injunctions, penalties and other “equitable relief” for alleged violations of federal securities laws. The regulator insists that investors participating in staking programs invest their assets with a reasonable expectation of profit, and therefore such programs must be registered.
Case history
In March 2023, the SEC began investigating Ethereum's (ETH) security status, setting the stage for broader oversight of cryptocurrency companies. Consensys, along with other major market players, received subpoenas as part of this investigation.
The SEC's "Wells Notice" stated that MetaMask was acting as an unregistered broker. In response, Consensys filed a counterclaim against the SEC in April 2024, demanding that the regulator clearly define the status of Ethereum and other cryptocurrencies.
In June 2024, Consensys announced that the SEC had closed its investigation into Ethereum and had no plans to take enforcement action against the company. However, Consensys has not withdrawn its lawsuit and continues to insist that it did not break the law.
Consequences and reaction
Consensys is asking the court to find that it did not act as an unregistered broker and never offered securities through its MetaMask Swaps and Staking products. The company maintains its innocence and is ready to fight the SEC's charges in court.
Earlier, in April 2024, the decentralized exchange Uniswap also received a warning from the SEC about a possible lawsuit. This shows that the regulator is serious about controlling cryptocurrency markets and their participants.
The case against Consensys and its outcome could significantly impact the entire crypto industry, especially those companies that provide services without registering as brokers. This will set an important precedent in the field of cryptocurrency regulation and may set the tone for further actions by regulators.
