The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Consensys Software Inc., accusing the blockchain firm of violating federal securities laws by failing to register as a broker and engaging in unregistered securities offerings. The SEC’s complaint highlights Consensys’s operations through its Metamask Swaps and Metamask Staking services.
SEC Charges Consensys With Violating Federal Securities Laws
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Consensys Faces SEC Lawsuit Over Unregistered Broker Activities
The SEC alleges that Consensys has acted as an unregistered broker since 2020 through its Metamask Swaps platform, which facilitates crypto asset transactions for retail investors. According to the complaint, Consensys solicits investors, provides investment advice, routes investor orders, and handles customer assets without the necessary registration, collecting over $250 million in fees in the process.
Additionally, the SEC claims that since 2023, Consensys has offered and sold unregistered securities through its Metamask Staking service, involving investment contracts with Lido and Rocket Pool staking programs. These activities, according to the SEC, deprived investors of essential protections provided by federal securities laws, including transparency and disclosure of conflicts of interest.
The SEC is pursuing a permanent injunction against Consensys to halt any further infractions, along with civil monetary penalties and any additional relief deemed essential for investor protection. This development comes after Consensys filed a lawsuit against the SEC. Consensys contends that Gurbir Grewal, the SEC Division of Enforcement director, authorized the investigation into Ethereum 2.0 in 2023.
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