The United States Securities and Exchange Commission (SEC) has initiated a lawsuit against tech titan Consensys, maker of the popular MetaMask wallet. According to the SEC, Consensys played the dual role of an unregistered securities broker and staking service through MetaMask, raking in over $250 million in fees illegally since January 2023.
This regulatory move by the SEC comes amidst growing tensions around cryptocurrency regulation. Significantly, the U.S. Supreme Court just recently overturned the “Chevron doctrine,” a principle that provided federal agencies like the SEC a great deal of interpretive latitude in defining their jurisdiction. This action has spurred ongoing debate about SEC’s authority to regulate crypto assets like MetaMask.
Consensys has defiantly responded by suggesting that the lawsuit forms part of the SEC’s overstretching regulatory efforts. The company insists that the SEC lacks the authority to control software interfaces like MetaMask. The crypto software giant had earlier taken the offensive in April by suing the SEC after receiving notification of an impending lawsuit over MetaMask’s staking programs.
The SEC’s suit accuses Consensys of enabling MetaMask users to stake Ethereum through third-party programs, which it alleges are securities. Importantly, the SEC isn’t labeling Ethereum a security, however, it seemed to imply that staked Ethereum could be so classified. This could potentially add another layer of complexity to the SEC’s airtight case against Ethereum, given that staking has become a crucial element of Ethereum’s functionality.
Despite the SEC greenlighting the trade of spot Ethereum ETFs last month – essentially declaring Ethereum as not a security, the current lawsuit against Consensys suggests the SEC is not prepared to back off from its aggressive stance towards prominent players in the U.S. crypto market.