The US Securities and Exchange Commission (SEC) has intensified its legal battle with the crypto industry by filing a lawsuit against ConsenSys, a blockchain company known for Metamask wallet product and its focus on the Ethereum network.
The SEC alleges that ConsenSys violated federal securities laws by operating as an unregistered broker and dealer while offering services for “crypto securities,” collecting fees of more than $250 million.
SEC lawsuit against ConsenSys
The SEC lawsuit vs. ConsenSys is reminiscent of similar complaints against other crypto companies like Coinbase and Kraken. What sets this lawsuit apart, however, is the context surrounding ConsenSys’ response to the SEC’s actions.
In April, ConsenSys published filed a lawsuit against the SEC after receiving a notice from Wells seeking clarification on whether Ethereum should be classified as a security. ConsenSys recently announced the closure of the SEC’s “Ethereum 2.0” investigation, interpreting it as an indication that Ethereum fell outside the agency’s jurisdiction.
Notably, the SEC did not list Ethereum as one of the unregistered securities offered by ConsenSys in Friday’s filing, which may have led to the approval of Ethereum ETF applications by the world’s largest asset managers on May 23.
Battle for Regulation in the Crypto Industry
ConsenSys, founded by Joseph Lubinone of Ethereum’s developers, stands out from previous SEC targets. Instead of operating as an exchange, ConsenSys focuses on software development, including the MetaMask digital wallet.
The SEC lawsuit alleges that the company violated securities laws by facilitating the “swap” of crypto assets through MetaMask. The agency has mainly focused on Ethereum strike servicesnamely Lido and Rocket Pool, who claim that their tokens, stETH and rETH respectively, are unregistered securities.
The SEC further alleges that ConsenSys facilitated more than 36 million crypto asset transactions, including at least 5 million involving what the agency considers securities.
Previously, the SEC had similar costs related to strike against Kraken, resulting in a $30 million settlement, while Coinbase has disputed the charges.
While the new SEC complaint against the blockchain company does not classify Ethereum as a security, it represents another front in the SEC’s ongoing campaign against major players in the crypto industry.
Many within the crypto community may view this as a partial victory, given the absence of Ethereum as a unregistered securityHowever, the lawsuit further highlights the regulatory uncertainties surrounding the industry’s top companies.
ConsenSys, which is currently embroiled in an ongoing lawsuit against the SEC in Texas, criticized the agency’s actions, accusing it of pursuing an “anti-crypto agenda” through arbitrary enforcement actions and regulatory overreach.
At the time of writing, ETH was trading at $3,777, down 2.3% in the past 24 hours as the crypto market continues to face significant selling pressure.
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