Consensys, the parent company of Metamask, the Little Fox Wallet, was formally sued by the U.S. Securities and Exchange Commission (SEC) on Friday. The SEC accused MetaMask's Swap and staking products of violating securities laws, and named Lido and Rocket Pool's liquidity staking tokens stETH and rETH as unregistered "securities."
Consensys, the parent company of Metamask, the most commonly used fox wallet in the circle of users, was officially sued by the U.S. Securities and Exchange Commission (SEC) yesterday (28). The SEC accused MetaMask's Swap and pledge products of violating federal securities laws. Consensys has been operating as an unregistered broker since 2020 and engaged in unregistered securities issuance and sales through MetaMask.
According to Coindesk and Cointelegraph, the SEC wrote in the indictment that MetaMask allows users to buy and sell digital assets directly within the application through its "Swap" service. Consensys charges a fee for this service and has facilitated more than 36 million cryptocurrency transactions in the past four years. The SEC claims that at least 5 million of these transactions involved "crypto asset securities."
These crypto asset securities include Polygon (MATIC), Mana (MANA), Chiliz (CHZ), Sandbox (SAND), and Luna (LUNA), tokens that were classified as securities in previous SEC lawsuits, and the SEC also hinted that other digital assets may also be securities.
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SEC goes after staking services! Lido and Rocket Pool are named
The complaint also alleges that Consensys deprived investors of important protections by collecting more than $250 million in fees through unregistered crypto asset brokerage trading and staking services. The SEC seeks permanent injunctions, civil penalties, and other equitable relief for Consensys’ alleged violations of federal securities laws.
The enforcement action confirms long-standing concerns in the industry that the SEC is still trying to keep the flow of ETH derivatives under control despite the likelihood of ETH being classified as a security significantly reduced following the unexpected approval of a key Ethereum spot ETF document last month. As collateral tokens, Lido's stETH and Rocket Pool's rETH are considered securities.
LDO plunged nearly 18%, and RPL fell 6%
Affected by the SEC's allegations, Lido (LDO) plunged more than 23% from $2.43 last night, and fell to $1.86 this morning. It was reported at $1.95 before the deadline, a 17.6% drop in the past 24 hours; Rocket Pool (RPL) fell relatively less in the past 24 hours, about 6%, and was temporarily reported at $19.23 at the time of writing. MetaMask, which was listed as the main defendant, has not yet issued a coin.
