Ethereum infrastructure developer ConsenSys has decided to proactively sue the SEC after receiving a Wells Notice from the agency, and the lawsuit reveals that the SEC has been investigating ConsenSys’ MetaMask product for several years.
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SEC Targets ETH and MetaMask
SEC had long planned to take action, ConsenSys has received seven subpoenas
ConsenSys cites precedent
SEC Targets ETH and MetaMask
ConsenSys received a Wells Notice from the SEC on April 10th, and according to the lawsuit filed on April 25th, ConsenSys has the following demands:
Declaration from the federal court that ETH is not a security.
Confirmation that MetaMask’s staking service does not violate securities law.
Recognition that MetaMask is not a broker-dealer under federal law.
The lawsuit emphasizes that allowing the SEC to illegally control ETH would have disastrous consequences for the Ethereum network and ConsenSys.
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SEC had long planned to take action, ConsenSys has received seven subpoenas
ConsenSys stated that it has been receiving subpoenas from the SEC since 2022:
April 2022: Investigation into MetaMask.
September 2022: Allegations of illegal staking services by MetaMask.
2023: Three subpoenas.
March 2024 and April 2024: One each.
ConsenSys is seeking an injunction from the federal court to prohibit the SEC from conducting further investigations and taking any enforcement actions against MetaMask’s swaps or staking services. They emphasize that the MetaMask wallet is merely an interface, and it neither holds users’ digital assets nor executes any transactions.
ConsenSys’ announcement is as follows.
ConsenSys cites precedent
ConsenSys references a speech by former SEC director Bill Hinman in 2018, where he claimed that Ethereum is not a security. They also mention that the Commodity Futures Trading Commission (CFTC) has regulatory authority over Ethereum. ConsenSys emphasizes that its business has developed in consensus with regulatory bodies. The SEC’s attempt to seize regulatory control over Ethereum exceeds Congress’ authorized scope.
CoinDesk, an external media outlet, points out that Terraform Labs and Coinbase have also made similar arguments in their lawsuits against the SEC, but two judges have already rejected them, stating that cryptocurrencies are not bound by this principle. The SEC representative declined to comment on this lawsuit.
ConsenSys
ETH
MetaMask
Further reading
ConsenSys explains from a technical standpoint why Ethereum ETFs should be approved
Collaboration with online broker Robinhood, app allows direct purchase of crypto assets into MetaMask wallet.