Eleanor Terrett, a journalist, took to X to report that the Securities and Exchange Commission (SEC) has filed charges against Consensys for allegedly violating securities laws through its MetaMask platform. The SEC claims Consensys operated as an unregistered broker dealer, facilitating over 36 million crypto asset transactions, including 5 million involving securities, without proper registration. This activity reportedly generated more than $250 million in transaction fees.
Consensys, which received a Wells notice in April, was anticipating these charges by month-end. The SEC’s lawsuit, filed in the Eastern District of New York, alleges Consensys violated registration provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The commission seeks injunctive relief and penalties against the company.
The SEC specifically targets MetaMask’s Swaps and Staking services, accusing them of facilitating the sale of unregistered securities tokens like CHZ, LUNA, MATIC, MANA, and SAND. These services, according to the SEC, operate without necessary regulatory oversight, acting as intermediaries in transactions and managing assets through smart contracts.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized the seriousness of the charges, stating that Consensys allegedly collected substantial fees while depriving investors of federal securities law protections. The lawsuit underscores the SEC’s crackdown on unregistered securities offerings in the cryptocurrency market.
Ethereum ETFs on the Verge of SEC Approval: A New Chapter Begins July 4In response, Consensys has criticized the SEC’s actions as regulatory overreach, part of what it describes as an anti-crypto agenda. The company argues that MetaMask, a software interface, should not be subject to SEC brokerage regulations. Consensys intends to challenge the SEC’s jurisdiction in court, highlighting broader implications for the future of decentralized finance (DeFi) platforms like MetaMask.
The legal battle comes amid increasing regulatory scrutiny of cryptocurrency-related activities. The outcome of this case could set a precedent for how U.S. regulators oversee blockchain and cryptocurrency technologies, impacting the industry’s legal landscape moving forward. However, Consensys remains confident in its position and continues to pursue legal avenues to defend MetaMask’s operations.
