SEC files new lawsuit against Metamask Developer Consensys

The US Securities and Exchange Commission (SEC) filed a lawsuit against Metamask developer, ConsensysThe commission alleges that the crypto firm violated securities laws by operating as an unregistered securities broker-dealer.

The SEC accuses Consensys of violating securities laws with Metamask

According to court documentThe SEC alleges that Consensys acted “as unregistered broker cryptocurrency through MetaMask Swaps” service since October 2020. The Commission also accused the crypto firm of engaging in the unregistered offering and sale of securities through cryptocurrency staking programs.

The Securities and Exchange Commission (SEC) reported that as of 2020, Consensys brokered more than 36 million cryptocurrency transactions through its MetaMask Swaps, of which at least 5 million involved cryptocurrency-based securities. Metamask is known as one of the most popular cryptocurrency wallets. In addition to storing their cryptocurrency assets on the app, users can buy and sell cryptocurrencies by exchanging one cryptocurrency asset for another.

This “swap” service is the focal point of the SEC’s enforcement action. The SEC claims that some of these crypto assets are securities, and by allowing users to exchange these securities, Agreement acted as an unregistered securities broker, thereby violating securities laws.

The SEC went ahead and included her on the list Polygon (MATIC)Decentraland (MANA), Chiliz (CHZ), The Sandbox (SAND) and Luna (LUNA) as cryptocurrency securities that have been made available for trading on the Metamask swap platform.

In addition, the SEC accused Consensys of performing a “traditional securities market function” by offering and selling securities at Lido and rocket pool. The Commission found that the staking programs offered by Lido and Rocket Poo are investment contracts and that Consensys was wrong to offer these securities through unregistered transactions on its “MetaMask Staking” platform.

The Origin of the Legal Battle Between the SEC and Consensys

Interestingly, the SEC’s lawsuit against Consensys comes just a few months after the cryptocurrency company filed a lawsuit against the Commission, accusing the SEC of an “unlawful power grab.” Consensys has asked the SEC for judicial relief in connection with the potential action. They have also asked the court to declare that Ethereum was not a security and that the SEC has no jurisdiction over cryptocurrency matters.

It seems that the cryptocurrency company has won this battle, considering that The SEC abandoned its investigation to Ethereum’s status as a security. However, in letters informing Consensys about Commission Decision to end its investigation into Ethereum, the SEC warned the crypto firm that it could pursue enforcement actions against it on other issues, which it has now done.

In response to the SEC’s lawsuit, Consensys he stated that he would “strongly pursue” the lawsuit he originally filed against the SEC. The crypto firm also noted that it fully expected the SEC to follow through on its threat to say that MetaMask must be registered as a securities broker.

Featured image from CNBC, chart from TradingView