Bitrabo Editorial
The US Securities and Exchange Commission (SEC) has escalated its legal dispute with the cryptocurrency industry by suing ConsenSys, a blockchain company renowned for its MetaMask wallet and Ethereum network focus.
Alleging that ConsenSys operated as an unregistered broker and dealer, the SEC claimed violations of federal securities laws, with fees exceeding $250 million.
SEC Lawsuit and ConsenSys
The recent lawsuit by the SEC against ConsenSys mirrors similar actions taken against other crypto firms like Coinbase and Kraken. Notably, ConsenSys responded uniquely to the SEC’s moves.
In April, ConsenSys filed a lawsuit against the SEC following a Wells notice inquiry on Ethereum’s security classification. Recently, ConsenSys announced the closure of the SEC’s “Ethereum 2.0” probe, interpreting it as Ethereum being beyond the agency’s jurisdiction.
Interestingly, Ethereum was not named as one of the unregistered securities offered by ConsenSys in the recent filing, possibly influencing the approval of Ethereum ETF applications by major asset managers on May 23.
Regulatory Challenges in the Crypto Industry
ConsenSys, founded by Ethereum developer Joseph Lubin, stands out from previous SEC targets by focusing on software development and MetaMask’s digital wallet rather than functioning as an exchange.
The SEC alleges that ConsenSys violated securities laws by enabling crypto asset swaps via MetaMask and points to Ethereum staking services like Lido and Rocket Pool, suggesting their tokens, stETH and rETH, are unregistered securities.
Moreover, the SEC claims ConsenSys facilitated over 36 million crypto asset transactions, with at least 5 million involving what the agency considers securities.
While the SEC’s lawsuit does not designate Ethereum as a security, it signifies another front in the agency’s regulatory battle with prominent crypto industry entities.
Some in the crypto community might see this as a partial win due to Ethereum’s exclusion as an unregistered security. However, it underscores the regulatory uncertainties affecting crypto industry leaders.
In a lawsuit against the SEC in Texas, ConsenSys criticized the agency for what it deemed an “anti-crypto agenda” driven by arbitrary enforcement measures and regulatory overreach.
At the time of writing, ETH was trading at $3,777, showing a 2.3% decline in the past 24 hours, amid significant selling pressure in the crypto market.
Featured image from DALL-E, chart from TradingView.com