SEC Sues Consensys Over MetaMask Staking, Broker Allegations
Consensys, a software provider for the crypto world of Ethereum, is said to be engaged in the lawsuit with the US Securities and Exchange Commission (SEC) for its MetaMask breaking the securities law. According to the SEC, MetaMask brokered, which is not regulated, and MetaMask and an unregistered securities program was offered on it via the staking service.
Unregistered Broker Allegations
A lawsuit that was submitted by SEC in the Eastern District of New York, is indicating that the MetaMask software has been involved in the process of buying and selling securities of the company without it being registered. The filing announces Consensys as the provider of mock staking services for Lido (LDO) and Rocket Pool (RPL), which were not registered.
Staking Service Under Scrutiny
The SEC publicized that FinCo ICO, which is another stable coin created by MetaMask, has been suspended due to the liquid staking programs offered by the Consensys company lifecycle from January 2023. In the program, the issuing of liquid staking tokens is done; for example, stETH and rETH are produced in exchange for staked assets, thus, the issuance of these tokens would not be conditioned by the staking status.
MetaMask Swaps Involved
It is further presented in the suit that MetaMask Swaps, which is a platform that facilitated the trading of digital assets through Consensys software. The SEC emphasized that out of a total of 36 million crypto transactions, 5 million were “crypto asset securities”. The securities are the popular ones that include Polygon (MATIC), Mana (MANA), Chiliz (CHZ), the Sandbox (SAND), and Luna (LUNA).
Additional Allegations and Financial Impact
As per the SEC’s complaint, the Consensys broker took on the role of underwriter for securities issued by Lido and Rocket Pool, actively participating in their distribution and pocketing some $250 million fees for his efforts. This lawsuit came hot on the heels of a communication from the SEC clearly saying that their Consensys investigations were over, although they did not exclude the possibility of future enforcement actions related to other issues.
Conclusion
Friday’s lawsuit is a reminder of SEC’s consistent efforts to regulate the cryptocurrency market and ensure compliance with securities laws. The ongoing realization of the case will be an influential form of Consent’s future as well as the overall crypto industry.
