In a recent development, ConsenSys, the blockchain software company founded by Ethereum co-founder Joseph Lubin, has been granted an expedited decision by a Texas judge in its lawsuit against the US Securities and Exchange Commission (SEC). The decision will determine whether the SEC can regulate MetaMask, a crypto wallet, as a broker-dealer.
ConsenSys Lawsuit
ConsenSys lawyers’ request for an expedited decision was approved by Judge Reed O’Connor. The case will evaluate the merits of ConsenSys’ argument on whether the SEC has congressional authority to regulate MetaMask as a securities broker and issuer.
The judge has set a series of deadlines, including the filing of answers by the defendants before July 29, completion of limited issue discovery for dispositive motion by August 16, filing of opening briefs on dispositive motions by September 20, filing of amicus briefs by November 1, and filing of reply briefs by November 26.
On Monday, the SEC charged ConsenSys with engaging in the unregistered offer and sale of securities through MetaMask Staking and operating as an unregistered broker through MetaMask Staking and MetaMask Swaps.
SEC Allegations
The complaint alleges that since January 2023, ConsenSys has offered and sold “tens of thousands of unregistered securities” for liquid staking program providers Lido and Rocket Pool. These programs involve creating and issuing liquid staking tokens in exchange for staked assets.
The SEC claims that ConsenSys distributed these programs, engaging in the unregistered offer and sale of securities and operating as an unregistered broker.
The SEC’s complaint asserts that ConsenSys collected “substantial fees” as an alleged “unregistered broker” and conducted “unregistered securities transactions,” potentially exposing investors to risks without the protections provided by federal securities laws.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized the agency’s commitment to holding bad actors accountable in the securities market, which many experts believe should have new laws to encourage innovation and not be regulated by outdated laws as it is in this case.
Ultimately, ConsenSys’s lawsuit against the SEC has taken a significant step forward. A Texas judge has granted an expedited decision on whether the SEC has the authority to regulate MetaMask as a broker-dealer.
The ruling, expected by the end of the year or early 2025, will determine the future regulatory status of MetaMask and has broader implications for the cryptocurrency industry.
As of the latest update, the overall cryptocurrency market capitalization has once again reached a valuation of $2.24 trillion. The crypto market, spearheaded by Bitcoin (BTC), is displaying signs of recovery since Monday, with BTC maintaining a sideways trading pattern above the $62,000 threshold.
Conversely, Ethereum is currently trading at $3,410, reflecting a marginal 2% decline in price within the 24-hour timeframe.
Featured image from DALL-E, chart from TradingView.com