The US Securities and Exchange Commission (SEC) is suing Consensys, claiming the blockchain technology company’s MetaMask wallet acted as an unregistered stock broker.
According to recent court filings, the SEC says Consensys violated federal law by failing to register as a securities broker with the regulatory agency.
“Since October 2020, Consensys has been acting as an unregistered crypto asset broker through its MetaMask Swaps service.
Since January 2023, Consensys has been engaged in the unregistered offering and sale of securities in the form of crypto asset staking programs, and acts as an unregistered broker through its MetaMask Staking service. Through its conduct as an unregistered broker, Consensys has collected more than $250 million in fees.”
Additionally, the SEC alleges that Consensys also engaged in the sale of securities for the crypto staking protocols Lido and Rocket Pool.
“In addition to acting as a non-registered broker with respect to MetaMask Swaps, Consensys performs another traditional function of the securities market: the offering and sale of securities.
Specifically, Consensys has offered and sold tens of thousands of securities for two issuers: Lido and Rocket Pool. Through this behavior, Consensys acts as an underwriter of these securities and participates in the key points of their distribution.”
Consensys responded to the lawsuit, saying the SEC is engaging in overreaching regulation to expand its power.
“The SEC has pursued an anti-crypto agenda, led by ad hoc enforcement actions. This is just the latest example of regulatory overreach – a transparent attempt to redefine established legal norms and expand the SEC’s jurisdiction through litigation.
We are confident that the SEC has not been given authority to regulate software interfaces such as MetaMask.”
Earlier this year, the SEC sent Consensys a notice from Wells after she said she was investigating whether the smart contract platform Ethereum (ETH) was a security under its jurisdiction. However, Consensys said it had received notice that the regulator ended its investigation into the company earlier this month without taking any enforcement action.
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