- SEC sues Consensys for the services provided on Metamask, a popular Ethereum wallet
- The commission also claimed that the blockchain developer acted as an unregistered broker dealer for selling “thousands of unregistered securities” for Lido and Rocket Pool
Lido DAO, the liquid staking platform solution for Ethereum, became one of the highlights of the day an US authority took legal action against prominent crypto players. The authority in question is the United States Securities and Exchanges Commission, which released a press release announcing legal action against Consensys.
The regulatory authority took action against the blockchain developer company because of the product offerings on Metamask, a popular Ethereum wallet developed by Consensys. The SEC alleges that Consensys engaged in the,
“unregistered offer and sale of securities through a service it calls MetaMask Staking and with operating as an unregistered broker through MetaMask Staking and another service it calls MetaMask Swaps.”
Notably, the crypto market has been expecting the SEC to take a legal action against Consensys. The firm had received a Wells Notice in April with regard to Metamask and only recently did it also confirm that an action with regard to Ethereum was unlikely.
SEC concurrently takes aim at Lido and Rocket Pool
Moreover, the commission also took aim at Lido (LDO) and Rocket Pool (RPL), liquid staking protocols. The regulator claimed that by provided services to these platforms, Consensys acted as an “unregistered broker dealer”.
Read Lido DAO’s [LDO] Price Prediction 2023-24
Notably, Metamask’s Staking Service feature allows users to stake through Lido and Rocket Pool, thereby drawing the attention of SEC towards these protocols. Additionally, the commission has claimed that the blockchain company has “collected over $250 million in fees” from its “unregistered broker activities”. It said,
“Consensys has offered and sold tens of thousands of unregistered securities on behalf of liquid staking program providers Lido and Rocket Pool, who create and issue liquid staking tokens (called stETH and rETH) in exchange for staked assets.”
This aim has had an adverse effect on the price of LDO and RPL. The coin even saw its value plummeting by 10% immediately after the announcement of the legal action.
According to CoinMarketCap, at press time, LDO was trading just below the $2 mark, at $1.98. Prior to the announcement, LDO was trading at around $2.30 mark. The coin had a trade volume of over $232 million, and had recorded a value drop of over 15% in the last 24 hours.
Meanwhile, RPL also followed the same path with the coin recoding a loss of over 8% at press time. The coin was trading at $18.89 with trade volume of over $7 million. Notably, the coin was trading over $20 mark before the SEC announcement, indicating that it is yet to recover its lost value.
Moreover, the commission also claimed that some of the coins offered on Metamask were securities. This included Polygon (MATIC), Luna (LUNA), Chiliz (CHZ), the Sandbox (SAND), and Mana (MANA). Notably, some of these coins have already been brought up by the SEC in other legal actions.