SEC Sues Ethereum Developer Consensys Over Alleged Unregistered Broker Activities
The United States Securities and Exchange Commission (SEC) has filed a lawsuit against Ethereum software firm Consensys. The SEC's filing claims that since January 2023, Consensys has engaged in the unregistered offer and sale of securities via its crypto asset staking programs and acted as an unregistered broker through its MetaMask Staking service, allegedly collecting over $250 million in fees.
In April, Consensys preemptively sued the SEC after receiving notice of the agency's intention to sue over MetaMask’s staking programs. The firm claimed that the SEC had secretly considered Ethereum to be a security for over a year and was quietly assembling a broader case against the crypto asset. Earlier this month, Consensys announced that it had been informed by the SEC that the regulator was closing its case against Ethereum, a development that was celebrated within the crypto industry.
In the SEC's lawsuit, the agency highlights Consensys's facilitation of ETH staking via third-party services like Lido and Rocket Pool through MetaMask. The SEC argues that these staking programs are offered and sold as investment contracts, and therefore, should be classified as securities.
This lawsuit emerges during a turbulent period for the SEC and crypto regulation. Earlier on Friday, the U.S. Supreme Court's conservative majority struck down the "Chevron doctrine," a critical piece of American law that had allowed federal agencies, including the SEC, considerable latitude to interpret their regulatory powers. Consensys appeared to reference this Supreme Court decision, forcefully asserting that the SEC lacks the authority to regulate crypto products like MetaMask.