SEC “counter-sued” Consensys, accusing MetaMask, Lido and Rocket Pool’s ETH staking program

The US Securities Commission (SEC) has filed a lawsuit against Consensys, and also imposed securities arguments on Lido and Rocket Pool's staking programs.

According to documents submitted to the Eastern District Court of New York (USA) on the evening of June 28, the US Securities Commission (SEC) decided to sue Consensys, the blockchain infrastructure company behind the MetaMask cryptocurrency wallet, on charges of forced to violate securities laws.

Specifically, the SEC believes that Consensys has not registered with the SEC as a stock broker when providing MetaMask Swaps services since 2020. In addition, since 2023, MetaMask has conducted an illegal offering. Many crypto assets are considered securities through the MetaMask Staking program, profiting 250 million USD in transaction fees.

Not stopping there, the commission also accused Consensys of offering securities for two other projects, Lido and Rocket Pool, in the form of ETH tokens, which were then converted into liquid staking tokens, stETH and rETH.

In the lawsuit, the SEC continues to use the "Howey Test" as an argument for securities relations, claiming that investors put money into Lido's staking program, Rocket Pool with the expectation of receiving profits from business efforts of these organizations.

Consensys' MetaMask Staking service also directly used investors' ETH to send to Lido and Rocket Pool, and was also blamed.

In other words, the SEC does not directly affirm that ETH is a security, but imposes this category on ETH staking activities through MetaMask, Lido and Rocket Pool.

The price of Lido's LDO token, Rocket Pool's RPL and ETH are all falling sharply after the Consensys lawsuit was announced by the SEC.

1h chart of the LDO/USDT pair on Binance at 00:15 AM on June 29, 2024

1h chart of the RPL/USDT pair on Binance at 00:15 AM on June 29, 2024

15m chart of the ETH/USDT pair on Binance at 00:15 AM on June 29, 2024

The lawsuit also names cryptocurrencies that are considered securities when used through MetaMask Swaps, including Polygon (MATIC), Decentraland (MANA), Chiliz (CHZ), The Sandbox (SAND), and Terra (LUNA). ). Meanwhile, Consensys acts as a stock broker for coins including AMP (AMP), Axie Infinity (AXS), BNB (BNB), Chiliz (CHZ), COTI (COTI), DerivaDAO (DDX), Flow (FLOW), HEX (HEX), LCX (LCX), Decentraland (MANA), Polygon (MATIC), NEXO (NEXO), OMG Network (OMG), Powerledge (POWR), The Sandbox (SAND), Terra (LUNA ), Rally (RLY), XYO (XYO).

Most of these tokens appeared on the list of coins considered securities in the SEC's lawsuit against Binance and Coinbase in 2023, as well as previous legal actions by the commission.

It is worth mentioning that on June 19, Consensys issued a statement confirming that the SEC had ended its investigation into Ethereum with securities allegations. This is part of Consensys' lawsuit against the SEC in April, preventing the risk of legal action by the securities commission. However, the blockchain infrastructure unit at that time noted that it continued to pursue the lawsuit to ask the SEC to dismiss the allegation that MetaMask Swaps and the wallet's staking activities were securities in nature.

Consensys representative claimed to have predicted that the SEC would realize its previous threat and sue MetaMask's staking program. The company asserts that the SEC is exceeding its authority and will therefore continue to pursue the current lawsuit for justice.

The SEC in mid-May 2024 gave preliminary approval to Ethereum spot ETF proposals, and received the S-1 filings of the originators last week, with some experts predicting that the Commission The US Securities and Exchange Commission will allow these products to be traded in the first week of July.

In related developments, the US Supreme Court on June 28 rejected the "Chevron" case law, no longer allowing US government agencies to make their own decisions on aspects not yet regulated by law. determined but falls under their management authority. Many analysts believe that this ruling will have a major impact on new and emerging fields such as crypto and AI, for example causing the SEC to no longer be able to rely on the "Howey Test" to determine the status of securities. of cryptocurrency assets until the US Congress officially issues a clarifying legal framework.