SEC filed an a new lawsuit Consensys has been accused of violating securities laws. Consensys’s MetaMask services are the focus of the complaint, specifically its Swaps and Staking functions, for which the SEC alleges that they have operated as unregistered brokers services from October 2020 and Jan 2023 respectively.
This lawsuit was filed in response to a Wells Notice Consensys filed a lawsuit against the SEC for “aggressive and unlawful” overreach. Ethereum It is currently down approximately 2% but not a major selloff.
Consensys allegedly collected more than $250 million from its activities in the absence of investor protection.
MetaMask Swaps, it claims, is a platform that facilitates transactions for investors in cryptocurrency assets. It offers a variety of services, according to the suit, such as identifying and routing the orders, managing customer assets, and performing trades in behalf of the investors. Smart contracts on the platform eliminates investors’ need to deal directly with liquidity providers.
The stake of securities that are not registered
The SEC has claimed that MetaMask Staking, as a non-registered broker, was involved in unregistered offers and sales of securities via crypto asset staking since January 2023.
SEC identified digital assets such as MATIC, MANA and CHZ traded on MetaMask Swaps as investments contracts. Investors were led to believe that these securities would be profitable based on management efforts. The assets listed in this article are very similar. lawsuit against Coinbase Last year.
It also asserts that the MetaMask Staking facilitated by Lido or Rocket Pool are securities and investment contracts. They claim that they were advertised and sold by Lido without the SEC registering them.
Consensys is a digital asset broker that uses market expertise to choose third-party liquid providers. It has implemented an “Token Restriction Policy” Restriction of certain assets due to potential regulatory issues
Consensys is prohibited from ever violating the securities laws again. The SEC also wants to impose civil monetary sanctions and provide other reliefs for investors. In this case, the agency also requested a trial by jury.
SEC ends investigation before filing suit
Consensys secured an important contract recently despite its lawsuit significant When the SEC ended its investigation on Ethereum 2.0 and determined that ETH sales were not securities transactions, it was a win. Consensys sent a letter seeking clarification following the approval of ETH-ETFs. The decision is in line with the Commodity Futures Trading Commission’s classification that ETH is a commodity.
Consensys hailed this result as a win for Ethereum developers as well as the broader cryptocurrency industry. They emphasized that the SEC decision was a turning point, as it provided relief from possible regulatory actions which could have classified ETH a security.
The company is not the only one that has a problem. continues In its lawsuit against the SEC it argues the enforcement actions taken by the SEC against blockchain technology developers were themselves illegal. Consensys’s lawsuit seeks clarification that MetaMask Swaps, Staking and other user interfaces do not violate securities law.
Laura Brookover’s, Consensys’s head of litigation in a recent interview stated that Consensys would continue to file lawsuits against the SEC, stating that the fight for greater regulatory clarity was far from being over. Brookover stressed the importance of clear guidelines that would support innovation and ensure compliance with current laws. This reflects a wider concern in the crypto-community about the necessity for balance regulation.
Consensys could strengthen its case by asserting that the SEC has treated crypto in an aggressive manner.
Consensys’s legal dispute with the SEC shows the tensions between regulation and innovation. This dynamic will determine the future of the blockchain and its applications. This case’s outcome will be closely monitored by both industry players and regulators who are expected to influence the technological advancement in blockchain.
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Source: cryptoslate.com