The US Securities and Exchange Commission (SEC) has filed a lawsuit against Consensys, a prominent Ethereum developer and software provider. The lawsuit, filed on Friday, June 28, accuses Consensys of operating as an unregistered broker-dealer and offering unregistered securities. The SEC’s complaint also targets the services provided by MetaMask, including crypto swaps and staking.
Allegations Against Consensys
The SEC alleges that Consensys violated federal securities laws by failing to register as a broker and not registering the offer and sale of certain securities. This failure, according to the SEC, deprived investors of crucial protections afforded by these laws.
MetaMask Services Under Scrutiny
The complaint highlights that MetaMask Swaps has been operational since October 2020, and Consensys has offered staking programs via the MetaMask platform since January 2023. The SEC claims that through these activities, Consensys has collected over $250 million in fees without proper registration.
Inclusion of Specific Cryptocurrencies and Staking Programs
The lawsuit names several cryptocurrencies, including Polygon (MATIC), Chiliz (CHZ), the Sandbox (SAND), Mana (MANA), and Luna (LUNA), as securities. It also identifies staking programs from Lido (LDO) and Rocket Pool (RPL) as “investment contracts and, therefore, securities.” The SEC argues that investors in these protocols expect profits derived from the managerial efforts of Lido and Rocket Pool, which have not registered with the SEC.
Recent Context and Developments
This lawsuit follows recent developments where Consensys had sought clarification from the SEC regarding Ethereum 2.0 and had even sued the regulator in April. Notably, the SEC had approved spot Ethereum ETFs in May, adding another layer of complexity to the regulatory landscape.
The SEC’s lawsuit against Consensys marks a significant move in the regulatory scrutiny of the cryptocurrency industry, highlighting the ongoing challenges and legal battles faced by blockchain and crypto firms in navigating compliance and regulatory expectations.
