SEC Sues ConsenSys Over Ethereum’s MetaMask for Unregistered Broker Activities

On Jul 1, 2024

The recent escalation by the US SEC follows the dismissal of the Ethereum 2.0 investigation ahead of the spot Ether ETFs listings.
The US SEC has lost several cases against crypto tokens led by BNB and XRP but has remained consistent on exchanges violating securities laws.

The United States Securities and Exchanges (SEC) filed a lawsuit against Consensys in a federal court in Brooklyn, New York, on Friday over allegations of violating securities laws in its flagship digital wallet dubbed MetaMask.

🚨 Breaking: SEC files lawsuit against @ConsenSys, alleging unregistered broker activities and securities offerings via MetaMask’s Swap and Staking services. This marks a significant escalation in regulatory scrutiny over crypto platforms. #Ethereum #ETH pic.twitter.com/IoyZFCrMtw
— Collin Brown (@CollinBrownXRP) June 29, 2024

According to the regulatory agency, Consensys’ MetaMask has acted as an unregistered broker and engaged in offering and selling securities assets.

“Consensys violated the federal securities laws by failing to register as a broker and failing to register the offer and sale of certain securities,” the court filing alleges.

In response, Consensys indicated that the SEC’s legal battle against MetaMask was highly expected. However, Consensys condemned the US SEC for overstepping its jurisdiction since the agency was not mandated to regulate software interfaces such as MetaMask.

“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,” Consensys noted.

SEC Gradually Loses Battle Against Crypto

The adoption process of digital assets and web3 products is in a fresh phase that involves institutional investors and nation-states. As a result, the crypto industry will significantly impact the upcoming US general election.

In recent years, the US SEC has lost major cases against crypto projects alleged to have violated securities laws. For instance, District Judge Amy Berman Jackson dismissed the US SEC’s claim that secondary sales of Binance’s BNB coin qualify as securities under the Howey test.

In the SEC vs Ripple case, the presiding judge ruled the XRP secondary sales do not violate securities law.

Ethereum Outgrows SEC’s Crackdowns

Amid the ongoing crypto crackdown by the US SEC, Ethereum has managed to dodge the lethal bullet. As Crypto News Flash previously pointed out, the US SEC recently closed its investigations on Ethereum 2.0, which was considered a major win for the web3 developers’.

Meanwhile, listing spot Ether ETFs is expected to happen anytime, with analysts predicting more than $15 billion in cash inflows. Furthermore, the Ethereum network has grown to a major web3 ecosystem with more than $59 billion in total value locked and over $70 billion in stablecoins market cap.

However, Ethereum’s investment products registered over $60 million in cash outflows last week despite having over $14 billion in assets under management.

ETH Price Action

The Ethereum price against the US dollar has been consolidating in the past four months after an impressive bullish breakout earlier this year. The large-cap altcoin, with a fully diluted valuation of about $416 billion and a daily average traded volume of around $10 billion, gained 5 percent in the past seven days to trade around $3,464 on Monday, July 1, 2024.

From a technical standpoint, the ETH price has a macro-bullish outlook fueled by heightened adoption by institutional investors. If Eth’s price consistently closes above the daily 50 Moving Average, the altcoin will be ready for the ultimate pump to its all-time high.