The Commission

Metamask

The Sandbox

Rocket

The <a href="https://www.newsbtc.com/crypto/sec-announcement-crypto/#:~:text=What%20The%20SEC's%20Latest%20Announcement%20Means%20For%20The%20Crypto%20Industry,-by%20Scott%20Matherson&amp;text=A%20recent%20announcement%20by%20the,actions%20have%20had%20on%20it." target="_blank" rel="noopener ">US Securities and Exchange Commission (SEC)</a> has instituted a lawsuit against <a href="https://bitcoinist.com/unrealistic-demands-crypto-figure-says-consensys-might-need-prayers/" target="_blank" rel="noopener nofollow">Metamask developer, Consensys</a>. The Commission alleges that the crypto firm violated securities laws by acting as an unregistered securities broker. 
<h2 id="b-sec-accuses-consensys-of-violating-securities-laws-using-metamask-b">SEC Accuses Consensys Of Violating Securities Laws Using Metamask</h2> 
According to the <a href="https://storage.courtlistener.com/recap/gov.uscourts.nyed.517222/gov.uscourts.nyed.517222.1.0.pdf" target="_blank" rel="noopener nofollow">court document</a>, the SEC claims that Consensys has acted “as an <a href="https://bitcoinist.com/coinbase-for-interlocutory-appeal-be-rejected-sec/" target="_blank" rel="noopener nofollow">unregistered broker</a> of crypto asset securities through its MetaMask Swaps service” since October 2020. The Commission also accused the crypto firm of engaging in the unregistered offer and sale of securities through crypto staking programs.&nbsp; 
The SEC stated that Consensys has brokered over 36 million crypto transactions since 2020 through its MetaMask Swaps, at least 5 million involving crypto asset securities. <a href="https://bitcoinist.com/metamask-partners-with-moonpay/" target="_blank" rel="noopener nofollow">Metamask</a> is known as one of the most widely used crypto wallets. In addition to storing their crypto assets on the application, users can buy and sell cryptocurrencies by swapping one crypto asset for the other.&nbsp; 
This ‘Swap’ service forms the focal point of the SEC’s enforcement action. The SEC claims that some of these crypto assets are securities, and by enabling users to swap these securities, <a href="https://bitcoinist.com/consensys-sues-sec-over-ethereum-regulation/" target="_blank" rel="noopener nofollow">Consensys</a> acted as an unregistered securities broker, thereby violating securities laws in the process.&nbsp; 
The SEC went further to list <a href="https://bitcoinist.com/polygon-7800-breakout-55-matic/" target="_blank" rel="noopener nofollow">Polygon (MATIC)</a>, Decentraland (MANA), Chiliz (CHZ), The Sandbox (SAND), and Luna (LUNA) as the crypto securities that were made available for trading on Metamask’s swap platform. 
Additionally, the SEC accused Consensys of performing a “traditional function of the securities market” by offering and selling securities for<a href="https://bitcoinist.com/flaw-ethereum-geth-devastating-lido-finance/" target="_blank" rel="noopener nofollow"> Lido and Rocket Pool</a>. The Commission claimed that the staking programs offered by Lido and Rocket Poo are investment contracts and that Consensys was in the wrong by offering these securities through unregistered transactions on its ‘MetaMask Staking’ platform.&nbsp; 
<img loading="lazy" decoding="async" class="size-full" src="https://www.tradingview.com/x/LA3c1HT1/" width="1835" height="883"> 
<h2 id="b-the-genesis-of-the-legal-battle-between-sec-and-consensys-b">The Genesis Of The Legal Battle Between SEC And Consensys</h2> 
Interestingly, the SEC’s lawsuit against Consensys comes just months after the crypto firm <a href="https://bitcoinist.com/consensys-sues-sec-over-ethereum-regulation/" target="_blank" rel="noopener nofollow">filed a lawsuit</a> against the Commission, accusing the SEC of an “unlawful seizure of authority.” Consensys sought Judicial relief against a potential action from the SEC. They also asked the court to declare that <a href="https://bitcoinist.com/ethereum-in-the-hot-seat-sec-security-label-looms/" target="_blank" rel="noopener nofollow">Ethereum wasn’t a security</a> and that the SEC had no jurisdiction over crypto-related matters.&nbsp; 
The crypto firm looked to have won that battle, considering that the <a href="https://bitcoinist.com/ethereum-wins-sec-ends-securities-investigation/" target="_blank" rel="noopener nofollow">SEC dropped its investigation</a> into Ethereum’s status as a security. However, in the <a href="https://assets.ctfassets.net/gjyjx7gst9lo/6BtUdxsw1vlatBjIspkJN9/792adab194b9ac71c1eeeded42b01615/Termination_Notice_K._Schwartz_6.18.24.pdf" target="_blank" rel="noopener nofollow">letters</a> informing Consensys about the <a href="https://bitcoinist.com/ethereum-tokens-surge-after-sec-suspends-eth-investigation-ens-rallies-35/" target="_blank" rel="noopener nofollow">Commission’s decision</a> to drop its investigation into Ethereum, the SEC had warned the crypto firm that they could bring enforcement actions against them relating to other issues, which they have now done.&nbsp; 
Reacting to the SEC’s lawsuit, Consensys <a href="https://x.com/Consensys/status/1806754597803106572" target="_blank" rel="noopener nofollow">stated</a> that it would “vigorously pursue” the lawsuit it had initially filed against the SEC. The crypto firm also remarked that they had fully expected” the SEC to follow through with its threat of claiming that MetaMask had to be registered as a securities broker.&nbsp; 
Featured image from CNBC, chart from TradingView

SEC Serves Fresh Lawsuit To Metamask Developer Consensys – What’s The Problem This Time?

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