SEC Charges ConsenSys Over Unregistered Crypto Brokerage and Securities Offerings
The SEC has filed a lawsuit against ConsenSys, the company behind the popular MetaMask wallet. The commission alleges that ConsenSys operated as an unregistered broker and engaged in the unregistered offer and sale of securities through its MetaMask Swaps and Staking services.
Key points:
- SEC claims ConsenSys collected over $250 million in fees from unregistered broker activities.
- The lawsuit focuses on MetaMask Swaps and MetaMask Staking Services.
- ConsenSys allegedly offered and sold unregistered securities related to Lido and Rocket Pool staking programs.
In the latest lawsuit, the SEC outlines how ConsenSys allegedly used MetaMask to trade assets that the commission considers to be securities. These include tokens such as MATIC, MANA, CHZ, SAND, and LUNA.
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SEC alleges ConsenSys failed to register as a broker dealer
According to the SEC, ConsenSys’s MetaMask Swaps service acted as a broker by handling customer assets, routing orders, and receiving transaction-based compensation. The lawsuit argues that these activities required ConsenSys to register as a broker-dealer.
Furthermore, the SEC highlights the issues with ConsenSys’s MetaMask Staking Service, which was launched in January 2023. This feature enables users to participate in the Ethereum proof-of-stake consensus mechanism through liquid staking providers Lido and Rocket Pool.
The Commission contends that by offering these staking services, ConsenSys engaged in the unregistered offer and sale of securities.
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The lawsuit also speaks about the nature of liquid staking tokens (LSTs), such as Lido’s stETH and Rocket Pool’s rETH. The SEC argues that these tokens represent investment contracts. Additionally, the SEC also argues that, because of this, these fall under the SEC’s purview as securities.
This legal action against ConsenSys comes at a time when Coinbase filed a lawsuit against the SEC. The lawsuit also follows ConsenSys’s lawsuit against the SEC in April.
