SEC Serves Fresh Lawsuit To Metamask Developer Consensys

The

US
Securities
and
Exchange
Commission
(SEC)

has
instituted
a
lawsuit
against

Metamask
developer,
Consensys.
The
Commission
alleges
that
the
crypto
firm
violated
securities
laws
by
acting
as
an
unregistered
securities
broker.

SEC
Accuses
Consensys
Of
Violating
Securities
Laws
Using
Metamask

According
to
the

court
document,
the
SEC
claims
that
Consensys
has
acted
“as
an

unregistered
broker

of
crypto
asset
securities
through
its
MetaMask
Swaps
service”
since
October
2020.
The
Commission
also
accused
the
crypto
firm
of
engaging
in
the
unregistered
offer
and
sale
of
securities
through
crypto
staking
programs.

The
SEC
stated
that
Consensys
has
brokered
over
36
million
crypto
transactions
since
2020
through
its
MetaMask
Swaps,
at
least
5
million
involving
crypto
asset
securities.

Metamask

is
known
as
one
of
the
most
widely
used
crypto
wallets.
In
addition
to
storing
their
crypto
assets
on
the
application,
users
can
buy
and
sell
cryptocurrencies
by
swapping
one
crypto
asset
for
the
other.

This
‘Swap’
service
forms
the
focal
point
of
the
SEC’s
enforcement
action.
The
SEC
claims
that
some
of
these
crypto
assets
are
securities,
and
by
enabling
users
to
swap
these
securities,

Consensys

acted
as
an
unregistered
securities
broker,
thereby
violating
securities
laws
in
the
process.

The
SEC
went
further
to
list

Polygon
(MATIC),
Decentraland
(MANA),
Chiliz
(CHZ),
The
Sandbox
(SAND),
and
Luna
(LUNA)
as
the
crypto
securities
that
were
made
available
for
trading
on
Metamask’s
swap
platform.

Additionally,
the
SEC
accused
Consensys
of
performing
a
“traditional
function
of
the
securities
market”
by
offering
and
selling
securities
for

Lido
and
Rocket
Pool.
The
Commission
claimed
that
the
staking
programs
offered
by
Lido
and
Rocket
Poo
are
investment
contracts
and
that
Consensys
was
in
the
wrong
by
offering
these
securities
through
unregistered
transactions
on
its
‘MetaMask
Staking’
platform.

Total
crypto
market
cap
currently
at
$2.2
trillion.
Chart:

TradingView

The
Genesis
Of
The
Legal
Battle
Between
SEC
And
Consensys

Interestingly,
the
SEC’s
lawsuit
against
Consensys
comes
just
months
after
the
crypto
firm

filed
a
lawsuit

against
the
Commission,
accusing
the
SEC
of
an
“unlawful
seizure
of
authority.”
Consensys
sought
Judicial
relief
against
a
potential
action
from
the
SEC.
They
also
asked
the
court
to
declare
that

Ethereum
wasn’t
a
security

and
that
the
SEC
had
no
jurisdiction
over
crypto-related
matters.

The
crypto
firm
looked
to
have
won
that
battle,
considering
that
the

SEC
dropped
its
investigation

into
Ethereum’s
status
as
a
security.
However,
in
the

letters

informing
Consensys
about
the

Commission’s
decision

to
drop
its
investigation
into
Ethereum,
the
SEC
had
warned
the
crypto
firm
that
they
could
bring
enforcement
actions
against
them
relating
to
other
issues,
which
they
have
now
done.