The U.S. Securities and Exchange Commission (SEC) is suing Consensys, claiming that the blockchain tech firm’s MetaMask wallet acted as an unregistered securities broker.
According to recent court documents, the SEC says Consensys violated federal laws by failing to register with the regulatory agency as a securities broker.
“Since October 2020, Consensys has acted as an unregistered broker of crypto asset securities through its MetaMask Swaps service.
Since January 2023, Consensys has engaged in the unregistered offer and sale of securities in the form of crypto asset staking programs, and acted as an unregistered broker, through its MetaMask Staking service. By its conduct as an unregistered broker, Consensys has collected over $250 million in fees.”
Furthermore, the SEC alleges that Consensys also engaged in the sales of securities for crypto staking protocols Lido and Rocket Pool.
“In addition to operating as an unregistered broker with respect to MetaMask Swaps, Consensys performs another traditional function of the securities market: offering and selling securities.
Specifically, Consensys has offered and sold tens of thousands of securities for two issuers: Lido and Rocket Pool. By this conduct, Consensys acts as an underwriter of those securities and participates in the key points of their distribution.”
Consensys responded to the lawsuit, saying that the SEC is engaging in regulatory overreach to expand its power.
“The SEC has been pursuing an anti-crypto agenda led by ad hoc enforcement action. This is just the latest example of its regulatory overreach – a transparent attempt to redefine well-established legal standards and expand the SEC’s jurisdiction via lawsuit.
We are confident in our position that the SEC has not been granted authority to regulate software interfaces like MetaMask.”
Earlier this year, the SEC sent Consensys a Wells notice after saying that it was investigating whether the smart contract platform Ethereum (ETH) was a security under its jurisdiction. However, Consensys said it received a notice that the regulatory agency ended its investigation into the firm earlier this month without taking any enforcement action.
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