The SEC has filed a complaint against ConsenSys Software Inc. in the United States District Court for the Eastern District of New York, alleging that the company has been operating as an unregistered broker and offering unregistered securities through its MetaMask Swaps and MetaMask Staking platforms. This development highlights the regulatory scrutiny in the crypto industry and the importance of complying with federal laws.
Yep… we’re looking at yet ANOTHER crypto feud.
Read on to learn more details about the SEC filing!
ConsenSys, founded in 2014 and incorporated in Delaware in 2020, has developed a suite of crypto asset-related services under its MetaMask brand. MetaMask Swaps is a digital platform for brokering transactions in crypto asset securities, while MetaMask Staking offers investment programs like Lido and Rocket Pool staking.
MetaMask Swaps
The SEC claims that since October 2020, ConsenSys has acted as an unregistered broker through its MetaMask Swaps service, facilitating over 36 million crypto asset transactions, including at least 5 million in crypto asset securities. MetaMask Swaps allows investors to exchange one crypto asset for another, pulling available rates from a group of third-party liquidity providers and recommending the best option.
ConsenSys handles all transactions on behalf of the investor, collects transaction fees, and has brokered a substantial number of transactions through this service.
Since January 2023, the company has allegedly offered and sold securities without registration through its MetaMask Staking platform, involving investment programs from Lido and Rocket Pool. MetaMask Staking pools ETH contributed by investors, stakes it on the Ethereum blockchain, and issues new crypto assets (stETH and rETH) representing the investor’s interest in the staking pool and its rewards. These tokens are tradable on secondary markets, providing liquidity that direct staking does not.
Legal Violations and Implications
The SEC asserts that ConsenSys’ activities violate federal securities laws by failing to register as a broker and not registering the offer and sale of securities. The complaint highlights the need for transparency and investor protection, emphasizing that ConsenSys’ actions deprived investors of crucial protections afforded by registration.
The SEC is seeking a permanent injunction to prevent ConsenSys from continuing these activities, civil monetary penalties, and other relief deemed appropriate by the court. This case highlights the ongoing regulatory challenges in the crypto industry and the importance of compliance with federal securities laws.
The SEC’s complaint against ConsenSys marks a critical moment in the regulation of crypto asset services
Are you a MetaMask user? Does this news change your perspective on the platform? Let us know!
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