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The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Consensys, accusing the Ethereum software provider of engaging in unregistered securities sales through its MetaMask wallet services. Specifically, the SEC alleges that MetaMask acted as an unregistered broker and violated securities laws.
Consensys, a well-known blockchain software company, focuses on developing technologies such as MetaMask within the Ethereum blockchain ecosystem. On June 28, 2024, the SEC initiated legal proceedings against Consensys in the U.S. District Court for the Eastern District of New York.
According to the SEC’s complaint, Consensys unlawfully sold unregistered securities through its MetaMask wallet, acting as an unregistered broker. The company generated over $250 million in revenue from these transactions.
In a surprising turn of events, the SEC also targeted Ethereum staking services Lido and Rocket Pool. These third-party platforms power MetaMask’s staking feature, allowing users to deposit assets to secure the Ethereum blockchain in exchange for interest. The SEC referred to Lido’s stETH and Rocket Pool’s rETH tokens as unregistered securities.
MetaMask, widely used for managing Ethereum and other blockchain assets, offers a “Swaps” service that enables users to buy and sell digital assets directly within the app. Consensys collects fees for providing this service, facilitating over 36 million crypto transactions in the past four years. Notably, at least 5 million of these transactions involved “crypto asset securities,” including tokens like Polygon (MATIC), Mana (MANA), Chiliz (CHZ), the Sandbox (SAND), and Luna (LUNA).
The SEC’s enforcement action underscores its ongoing efforts to regulate a broad spectrum of the crypto market as securities. With the recent approval of an Ether ETF, the SEC’s scrutiny extends to liquid staking derivatives like Lido’s stETH token. Consensys now faces legal consequences for its alleged violations of securities laws.
Sentiment: Neutral
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