The new and improved SEC is officially walking away from its case against Consensys, the blockchain company behind MetaMask in the lawsuit which accused the company of selling unregistered securities and running an unlicensed brokerage, according to a statement from Consensys on Thursday.
The SEC will file a stipulation with the court to close the case, pending final approval from the Commission.
“We were committed to fighting this suit until the bitter end but welcome this outcome. No company wants to be the target of agency enforcement, but at the same time, it was our duty and honor to stand up for blockchain software developers in the hour it was most needed, as I’m sure our industry peers who also stood up against regulatory overreach would tell you,” said Consensys in its statement.
SEC originally charged Consensys with selling unregistered securities
In June 2024, the SEC announced charges against Consensys, accusing it of engaging in the “unregistered offer and sale of securities” through MetaMask Staking and acting as an unregistered broker via both MetaMask Staking and MetaMask Swaps.
The agency claimed that, since January 2023, the company had facilitated the sale of tens of thousands of unregistered securities by working with staking providers Lido and Rocket Pool.
According to the SEC, Lido and Rocket Pool issue liquid staking tokens—stETH and rETH—in exchange for staked assets. Unlike regular staked tokens, which remain locked and unusable while staked, these liquid staking tokens can be freely traded.
The SEC argued that Consensys played a major role in distributing these assets, making it responsible for their sale. Gurbir Grewal, the SEC’s former Enforcement Director, said at the time that:
“Consensys inserted itself squarely into the U.S. securities markets while depriving investors of the protections afforded by the federal securities laws. As this enforcement action shows, we continue to hold noncompliant actors in this space accountable, as we do across the securities market.”
The lawsuit also accused Consensys of operating as an unregistered broker by facilitating transactions, promoting investment products, handling customer funds, and collecting transaction-based compensation.
In the June 2024 lawsuit, the SEC claimed the company had earned “hundreds of millions of dollars in fees” while acting as an unlicensed brokerage firm.
Meanwhile, in April 2024, before the SEC filed its suit, Consensys actually sued the SEC first, claiming the agency had no legal basis for regulating Ethereum as a security.
In its statement today, Consensys said, “Devs both here at Consensys and across the crypto space are building a better world and deserve to have someone in their corner fighting for their rights. That is why we sued the SEC when it became clear that Ethereum was the next target, a lawsuit that actually caused the SEC to drop their Ethereum investigation.”
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