The US Securities and Exchange Commission (SEC) has escalated its legal battle with the cryptocurrency industry by filing a lawsuit against ConsenSys, a blockchain company known for his MetaMask wallet product and its focus on the ethereum network.
The SEC alleges that ConsenSys violated federal securities laws by operating as an unregistered broker-dealer while offering services for “crypto securities,” racking up fees exceeding $250 million.
SEC lawsuit against ConsenSys
He crypto/2024/06/28/sec-sues-metamask-consensys-ethereum–crypto-gensler/” target=”_blank” rel=”noopener nofollow”>SEC lawsuit against ConsenSys echoes similar complaints against other crypto companies such as Coinbase and Kraken. However, what sets this lawsuit apart is the context surrounding ConsenSys' response to the SEC's actions.
In April, ConsenSys filed a lawsuit against the SEC after receiving a notice from Wells seeking clarity on whether ethereum should be classified as a security. Recently, ConsenSys announced the closure of the SEC’s “ethereum 2.0” investigation, interpreting it as an indication that ethereum fell outside the agency’s jurisdiction.
Notably, the SEC did not name ethereum as one of the unregistered securities offered by ConsenSys in Friday's filing, which may have led to the approval of ethereum ETF applications from the world's largest asset managers on May 23.
The regulatory battle of the cryptocurrency industry
ConsenSys, founded by Jose Lubinone of the developers of ethereum, distinguishes itself from previous SEC targets. Rather than operating as an exchange, ConsenSys focuses on software development, including the MetaMask digital wallet.
The SEC's lawsuit claims that the company violated securities laws by allowing the “trading” of crypto assets through MetaMask. In particular, the agency has set its sights on ethereum betting servicesnamely, Lido and Rocket Pool, claiming that their tokens, stETH and rETH, respectively, are unregistered securities.
The SEC further claims that ConsenSys facilitated more than 36 million cryptoasset transactions, including at least 5 million involving what the agency considers securities.
Previously, the SEC had brought similar charges related to betting against Kraken, resulting in a $30 million settlement, while Coinbase has disputed the charges.
While the SEC's new complaint against the blockchain company does not classify ethereum as a security, it represents another front in the SEC's ongoing campaign against major players in the crypto industry.
Many within the crypto community may see this as a partial victory, given the absence of ethereum's inclusion as unregistered securityHowever, the lawsuit further highlights the regulatory uncertainties surrounding major players in the industry.
ConsenSys, currently involved in an ongoing lawsuit against the SEC in Texas, criticized the agency's actions, accusing it of pursuing an “anti-crypto agenda” through arbitrary enforcement actions and regulatory overreach.
At the time of writing, eth was trading at $3,777, down 2.3% over the past 24 hours, as the crypto market continues to experience significant selling pressure.
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