SEC Sues Consensys Over MetaMask Staking, Broker Allegations

[TomPluz]

Get the details here.

The U.S. SEC sued Ethereum software provider Consensys over its MetaMask service Friday, alleging the wallet tool was an unregistered broker that "engaged in the offer and sale of securities." The SEC suit also targeted Ethereum staking services Lido (LDO) and Rocket Pool (RPL), the third-party platforms MetaMask uses to power its staking feature.

The enforcement action represents the SEC's latest attempt to categorize a broad swath of the crypto market as securities. After the surprise Ether ETF approval last month, the suit also confirmed lingering suspicion that the SEC might still attempt to place liquid staking derivatives of ETH, like Lido's stETH token, under its regulatory remit.

MetaMask is the most-used wallet for Ethereum and a host of other blockchains. In addition to offering users the ability to store cryptocurrency bought on other platforms, MetaMask lets users buy and sell digital assets directly in-app via its "Swaps" service – one of the key features at issue in the SEC's lawsuit, which it filed Friday in the U.S. courthouse in the Eastern District of New York.

Here comes SEC again as it pursues its duty and obligation to the people to protect them from unwarranted loss coming from unregistered securities brokers - this must be the agency that should be given the Most Important Protector of the Year for fulfilling the kind of mandate it was given under the law of the land. And I am just KIDDING, of course. Now, with this development, do you think that SEC is just really fair and balance with this decision...or just like me you feel that this should not be the case? What you would say can be used in the court against you...

[Crwth]

There might be different things that we don’t know on reasons why they are pursuing this. They just probably want to protect investors in keeping their money and don’t want to get into scams. I’m not saying that the SEC is doing the right thing, but it will be clear with us why they’re doing this.

They are not targeting the derivatives, so maybe it’s just the start for the developers of MetaMask.

[target]

Well thats what happen when a wallet has CEO, they can target the head. Imprison him in case he won't register the wallet as broker.

Sec winning this issue will be monumental for all wallets out there. It wouldn't just be ETH but most likely BTC wallets and all that will also be concidered broker which they feel to regulate. Maybe there will be no privacy anymkre when this happen because they will put a face and names on those wallet addresses.

[hugeblack]

Staking services may be harmful to the development of wallets in the long term, as these services are similar to the returns provided by banks, and if they become popular, the central bank may try to restrict them exactly as it does with no-kyc exchange and liquidity providers for DEX.

[yhiaali3]

It seems that the SEC will never stop, the US Securities and Exchange Commission is still trying to get the upper hand in the entire crypto industry, even after the recent positive developments that occurred in the US Congress towards cryptocurrencies.

Regardless of whether they are targeting the MetaMask swap service or the Ethereum (LDO) staking service, the target is definitely the MetaMask wallet. Because it is a decentralized wallet and there are very large Ethereum transactions on the wallet, they may want to force it to impose KYC and AML on the users.

[ABCbits]

MetaMask these days seems can do almost "everything". Although SEC seems going too far again when AFAIK Rocket Pool is a decentralized staking pool.

[Stompix]

Now, with this development, do you think that SEC is just really fair and balance with this decision...or just like me you feel that this should not be the case?

Are those services offering financial assets and advertising themselves as smart financial contracts between players in the industry?
I just love when crypto services providers use in their promotions every single term from the traditional security definition, but god forbid they would want to be classified as such, because, it will come with responsibilities! And nobody want to actually be responsible for the clusterfuck those companies are running.

Here comes SEC again as it pursues its duty and obligation to the people to protect them from unwarranted loss coming from unregistered securities brokers - this must be the agency that should be given the Most Important Protector of the Year for fulfilling the kind of mandate it was given under the law of the land.

The SEC actually tried to get information on FTX before the collapse:
https://prospect.org/power/congressmembers-tried-to-stop-secs-inquiry-into-ftx/
Guess who stopped it, the same 'crypto lovers" investors with the same bs:

My office has received numerous tips from crypto and blockchain firms that SEC Chair
@GaryGensler ’s information reporting “requests” to the crypto community are overburdensome, don’t feel particularly… voluntary… and are stifling innovation.

Now if Lido and all the ETH is staking would collapse, are you going to blame the SEC for not acting or are you going to blame the ones opposing investigations in their affairs?

[electronicash]

no wonder the ETH ETF would be delayed. may this will not be approved until this case will be solved.

metamask better turn themselves into an exchange instead rather than just a wallet so take advantage of being a broker. they can take transactions fees and will probably take this into their benefit if they turn every wallet an account in their exchange. but then obviously they will also be collecting KYC data from users which i guess all of us ETH/token holder get to submit our licenses  crazy turn of events and so there will be no use to keep using dex.

[Zed0X]

It took them a while The people behind Metamask have themselves to blame for this lawsuit. What made them think they could earn from fees on staking and swapping then get away with it? They probably knew this was coming when they expanded the features of the wallet but they could not resist the $.

[Faisal2202]

Another day another case by the SEC, I think the government is paying bonuses to these authorities to bring up new cases every day. BTW they are doing great, From their point of view if it's wrong then I guess consensys has no other option but to comply with the SEC. Because till now, not a single company against which the SEC opened the case, won a case in their favor. SEC has won all the time AFAIK.

They went after Binance, Kucoin, and some other platforms now after Metmask, That's not right. I guess if things won't get right the company has to stop the swap and staking feature of the securities which they call unregistered but they only have to ban these services in US so I don't think it make a big difference, maybe the implementation of a function that recognize either you are in US or not is a big vulnerability that nobody wants while using Metmask, I mean if it can see where you live then what's the meaning of using Metamask in the first place.

[electronicash]

what will a user like you who is seeing all these taking place and the wallets like Metamask being a broker will soon be requiring users to submit KYC, will you comply?

maybe its time to prepare before metamask quickly change everything. there are other options to be than just comply such as importing your seed on other wallets. maybe they are not under the jurisdiction of SEC. i'm sure there are wallets like AlphaWallet. haven't really tried but maybe later.