Government & Policy

SEC Sues Consensys Amid Ongoing Crypto Crackdown

28 June 2024

Zaker Adham

Summary

The SEC has added Consensys to its growing list of targets in an ongoing crackdown on the cryptocurrency industry.

The Securities and Exchange Commission (SEC) filed a lawsuit against blockchain software firm Consensys in federal court in Brooklyn, New York. The regulator alleges that Consensys “engaged in the offer and sale of securities” and “acted as an unregistered broker” through its digital asset wallet, MetaMask.

According to the court filing, “Consensys violated federal securities laws by failing to register as a broker and failing to register the offer and sale of certain securities.”

In response to previous SEC actions, Consensys filed its own lawsuit in April, claiming regulatory overreach. The 10-year-old company noted that its lawsuit came after receiving three subpoenas last year and a Wells notice from the SEC alleging federal securities law violations.

The SEC has been actively pursuing enforcement actions against various crypto firms this year, focusing on those involved with Ethereum and decentralized finance (DeFi). Companies such as ShapeShift, TradeStation, and Uniswap have all been targeted. The SEC is also reportedly investigating the Ethereum Foundation.

Just two weeks ago, Consensys announced that the SEC had decided to close its investigation into Ethereum 2.0 without pursuing enforcement actions against the company. “The Enforcement Division of the SEC responded by notifying us that it is closing its investigation into Ethereum 2.0 and will not pursue an enforcement action against Consensys,” the company stated on June 18.

Consensys criticized the SEC's latest move in an emailed statement on Friday, describing it as part of an “anti-crypto agenda.” The company accused the SEC of “regulatory overreach” and attempting to “redefine well-established legal standards and expand its jurisdiction via lawsuit.” Consensys expressed confidence in its position, asserting that “the SEC has not been granted authority to regulate software interfaces like MetaMask.”