In a shocking turn of events, the U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against cryptocurrency firm Consensys, accusing it of operating as an unregistered broker through its MetaMask swaps service and failing to register the offer and sale of securities through its crypto staking programs. The SEC claims that Consensys collected over $250 million in fees as an unregistered broker through these services, violating broker registration requirements and securities laws.
Consensys operates the popular MetaMask self-custodial crypto wallet, which allows users to store, buy, send, and swap tokens. However, the SEC alleges that Consensys failed to comply with federal securities laws by offering and selling digital assets as securities without proper registration. The SEC also alleges that Consensys failed to properly register its MetaMask swaps service as a national broker-dealer, which is required for all trading activities involving securities.
Despite receiving notice that the SEC had closed its investigation into the company, Consensys plans to continue pursuing its lawsuit to challenge the SEC’s authority to regulate software interfaces built on the ethereum blockchain. In April, Consensys sued the SEC after receiving a formal notice of a planned enforcement action against the company. The lawsuit claimed that the SEC was attempting to regulate ether, the world’s second-largest cryptocurrency, unlawfully through these actions.
In response to requests for comment, Consensys did not immediately provide a statement. However, it is clear that this lawsuit will have significant implications for both Consensys and the wider cryptocurrency industry as a whole. If successful, this case could set a precedent for how regulators approach digital assets and their use in trading activities on blockchain networks.