- The U.S. SEC has filed a lawsuit against Consensys, alleging it operated as an unregistered broker and illegally sold securities since 2020.
- The lawsuit also claims Consensys provided support for liquid staking services like Lido and Rocket Pool as investment contracts.
In a recent lawsuit filed in the Eastern District of New York, the U.S. Securities and Exchange Commission (SEC) has sued Consensys, the parent company of MetaMask.
The complaint, dated June 28, accuses Consensys of operating as an unregistered broker and engaging in the unregistered offer and sale of securities through MetaMask since 2020.
Fox Business journalist Eleanor Terrett reported on X (formerly Twitter) that the charges against Consensys were anticipated following the Wells notice they received in April. She mentioned that her sources expected the charges to be filed by the end of the month.
🚨NEW: The @SECGov has formally charged @Consensys with violating securities laws by operating as an unregistered broker dealer and engaging in the offer and sale of securities through its @MetaMask platform.
— Eleanor Terrett (@EleanorTerrett) June 28, 2024
This was expected, following the Wells notice Consensys received in… pic.twitter.com/1Fi4cvp3ek
Additionally, the lawsuit alleges that the company earned over $250 million in fees by brokering cryptocurrency transactions and providing staking services without the required registration. This deprived investors of essential protections.
The SEC's lawsuit further states that Consensys supported liquid staking services for Lido (LDO) and Rocket Pool (RPL) as investment contracts, indicating that these too are unregistered securities.
“By allegedly collecting hundreds of millions of dollars in fees as an unregistered broker and engaging in the unregistered offer and sale of tens of thousands of securities, Consensys inserted itself squarely into the U.S. securities markets while depriving investors of the protections afforded by the federal securities laws,” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement stated in a press release.
Grewal further emphasized that the enforcement action demonstrates their commitment to holding non-compliant actors accountable in this sector, just as they do across the securities market.
In April this year, Consensys filed litigation against the SEC to challenge their regulatory overreach, particularly concerning the classification of Ethereum as a security. Recently, the SEC concluded its investigation into Ethereum 2.0, announcing no enforcement action against Consensys.
Edited by Harshajit Sarmah
