The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Consensys, alleging that the blockchain technology firm’s MetaMask wallet operated as an unregistered securities broker. According to recent court filings, the SEC contends that Consensys violated federal laws by failing to register with the regulatory agency as a securities broker.
The SEC claims that since October 2020, Consensys has acted as an unregistered broker for crypto asset securities through its MetaMask Swaps service. Additionally, starting from January 2023, Consensys allegedly engaged in the unregistered offer and sale of securities via crypto asset staking programs and acted as an unregistered broker through its MetaMask Staking service. The SEC asserts that Consensys collected over $250 million in fees through its activities as an unregistered broker.
Moreover, the SEC accuses Consensys of involvement in the sale of securities related to crypto staking protocols of Lido and Rocket Pool. The SEC states that apart from functioning as an unregistered broker for MetaMask Swaps, Consensys performed a traditional securities market role by offering and selling securities. Specifically, Consensys is accused of offering and selling tens of thousands of securities for Lido and Rocket Pool issuers, thus acting as an underwriter and participating in pivotal stages of their distribution.
Consensys has responded to the lawsuit, asserting that the SEC’s actions represent regulatory overreach aimed at expanding its authority. Consensys characterizes the SEC’s approach as part of an anti-crypto agenda driven by ad hoc enforcement actions. The firm views the lawsuit as a transparent effort to redefine established legal standards and broaden the SEC’s jurisdiction. Consensys maintains its stance that software interfaces like MetaMask should not fall under the SEC’s regulatory purview.
Earlier this year, the SEC issued a Wells notice to Consensys while investigating whether Ethereum (ETH), the smart contract platform, qualified as a security under its jurisdiction. However, Consensys confirmed that it received notification that the SEC concluded its investigation into the company without pursuing any enforcement actions earlier this month.
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