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SEC Sues Consensys For MetaMask’s Swap And Staking Features

The U.S. Securities and Exchange Commission (SEC) sued Ethereum infrastructure provider Consensys on Wednesday for allegedly failing to register key services offered within its MetaMask software wallet.

The SEC’s lawsuit comes two months after it issued a Wells notice to Consensys voicing the agency’s intent to sue regarding the popular Ethereum wallet, which its website claims its “trusted by over 100 million users worldwide.”

The SEC’s Next Target: Consensys

In a press release on Wednesday, the SEC claimed that Consensys engaged in the “unregistered offer and sale of securities” through its MetaMask Stakng service. That includes “tens of thousands of unregistered securities” on behalf of both Lido and Rocketpool – the liquid staking providers with which Lido is integrated.

Meanwhile, both the MetaMask Staking and MetaMask Swaps services allegedly made the company an “unregistered broker,’ by providing investment information on crypto assets, facilitating trades, and collecting “hundreds of millions of dollars in fees as an unregistered broker.”

Consensys inserted itself squarely into the U.S. securities markets while depriving investors of the protections afforded by the federal securities laws,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, in an accompanying statement.

Earlier this week, the SEC closed its investigation into Consensys regarding Ethereum 2.0 and its potential status as an unregistered security. Experts believe the agency’s latest approval of Ethereum spot ETFs is a de facto admission that Ethereum is legally a commodity that is outside of the SEC’s purview.

Yet the crypto giant’s fight hasn’t ended. Prior to Friday’s announcement, Consensys had pre-emptively sued the SEC seeking a court declaration that its staking and swap services do not violate securities laws.

Nothing New For The SEC

Uniswap Labs – the creators of Ethereum’s largest decentralized exchange – have also been targeted by the SEC on similar grounds, though Uniswap criticized the justification for its Wells notice as “weak.”

Coinbase too has been sued by the agency for offering unregistered brokerage services through both its centralized exchange and its Ethereum-based mobile wallet app. Allegations related to Coinbase wallet, however, were already thrown out of court.

In a post to Twitter on Friday, Consensys called the SEC’s lawsuit against it “the latest example of its regulatory overreach.”

“We will continue to vigorously pursue our case in Texas for ruling on these issues because it matters not only to our company but the future success of web3,” the firm said.

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