SEC Sues Consensys, Tagged MetaMask an Unregistered Securities Broker
The US Securities and Exchange Commission (SEC) has filed a lawsuit against Consensys, alleging that the company’s crypto wallet provider, MetaMask, brokered “securities transactions for retail investors” and engaged in the “offer and sale of securities.”
The SEC claims that Consensys violated federal securities laws by failing to register as a broker and to register certain securities’ offers and sales since 2016. The agency also alleges that the company deprived investors of crucial protections these laws could afford.
Consensys Allegedly Received $250 Million
In the lawsuit filed with the Eastern District of New York, the SEC alleges that Consensys collected over $250 million in fees through their actions related to the MetaMask wallet.
The situation has been complicated by a June 18th blog post from Consensys, announcing that the SEC has closed its investigation into Ethereum 2.0 and will not pursue enforcement action.
Consensys presented this decision as a “major win” for Ethereum developers and criticized the SEC for regulatory overreach and inconsistent positions on Ethereum.
The SEC’s letters to Consensys mentioned the possibility of other enforcement action but did not specifically mention MetaMask. The focal point of the complaint lodged against the company is the crypto wallet.
US SEC End Probe into Ethereum Status as Security
On June 19, Ethereum developer Consensys revealed in a tweet that the US Securities and Exchange Commission (SEC) has concluded its investigation into Ether, the second-largest cryptocurrency by market capitalization, and will not pursue charges against it as a security.
Consensys had previously filed a lawsuit against the SEC over its intention to regulate ETH as a security, citing potential damage to the token and its blockchain. The SEC under Chair Gary Gensler had maintained that ETH was an unregistered security for at least a year, which led to a drop in its price and prompted a series of investigations.
By referring to Ether as a security, the SEC likened the cryptocurrency to stocks, bonds, and notes. Such assets, therefore, require registration with the U.S. SEC before its traded to local investors.