SEC sues MetaMask crypto wallet maker Consensys, putting DeFi apps in the agency's crosshairs
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Gary Gensler, chairman of the US Securities and Exchange Commission (SEC). Photo: Samuel Corum/Bloomberg via Getty Images
The Securities and Exchange Commission's anticipated complaint against Consensys, the maker of the MetaMask crypto wallet, landed with a thud this afternoon.
Why it matters: The suit labels an even wider swath of crypto tools as securities, with the SEC's latest enforcement action taking aim at services that enable folks to swap coins or stake them.
Zoom in: The SEC's complaint homes in on the services that Consensys' MetaMask wallet offers, specifically, decentralized exchange (DEX) router services and staking.
- The regulator alleges Consensys violated federal securities laws, because its 2020-launched MetaMask Swaps feature — which makes token swapping more efficient for Ethereum users — effectively functions as a "broker of crypto asset securities."
- "With MetaMask Swaps and MetaMask Staking, Consensys has inserted itself into the U.S. securities markets, yet failed to act in accordance with the provisions of the federal securities laws to which it is subject and that exist to protect investors," the complaint reads.
Yes, but: It's not about the wallet itself — the SEC has already been pushed off Coinbase Wallet in its case against the U.S.'s largest crypto exchange.
- Also, it's not about ether. (The Ethereum blockchain's native coin — which the SEC has not explicitly called a commodity — is only mentioned in the complaint to explain staking)
The SEC also alleges that Consensys broke laws by offering and selling "securities" from liquid staking providers Lido and Rocket Pool, which it calls "issuers."
A spokesperson for Consensys said in a statement to Axios: "We are confident in our position that the SEC has not been granted authority to regulate software interfaces like MetaMask. We will continue to vigorously pursue our case in Texas for ruling on these issues."
- Consensys' founder Joe Lubin warned Axios of the possibility of this enforcement action last week, though the SEC had reached out to the firm saying another investigation, into Ethereum 2.0, was closed.
- The company sued the SEC in April over what it sees as regulatory overreach, asking a court to protect it, with a declaratory, and injunctive relief.
What we're watching: The complaint would appear to put applications that help traders find the best prices, like Consensys's Swaps product, in the agency's crosshairs. (Think 1inch, Matcha and Paraswap.)
