Consensys Cryptocurrency Heavyweight Faces SEC Lawsuit Regulators Wider Industry Crackdown Continues

Joseph Lubin, co-founder of Ethereum and CEO of blockchain company ConsenSys, has been targeted by the U.S. Securities and Exchange Commission (SEC) as the regulatory agency continues its crackdown on the crypto industry. On Friday, the SEC filed a lawsuit against ConsenSys in the U.S. District Court in Brooklyn, accusing the company of “engaging in the unregistered offering of securities” and “acting as an unregistered broker-dealer” through its digital asset wallet called MetaMask. The court documents state, “ConsenSys violated federal securities law by acting as a broker-dealer without registering as such and by offering and selling certain securities without registering the offers or sales.” In April, ConsenSys, which provides blockchain software, attempted to take preemptive action by filing its own lawsuit, accusing the regulatory agency of overstepping its authority. The company, which has been in operation for 10 years, claimed to have received three subpoenas last year along with a Wells notice from the SEC alleging violations of federal securities laws. So far this year, the SEC has issued notices, filed lawsuits, or reached settlements with numerous cryptocurrency companies focused on Ethereum and decentralized finance, including ShapeShift, TradeStation, and Uniswap. The agency is also reportedly investigating the Ethereum Foundation. Less than two weeks ago, ConsenSys announced a victory in its battle with the SEC. In a statement on June 18, the company said, “The SEC’s Division of Enforcement has informed us that it is closing its investigation into Ethereum 2.0 without taking enforcement action against ConsenSys.” ConsenSys, in an email statement, said that this action is part of the SEC’s “anti-crypto agenda.” The company stated, “This is just the latest example of its regulatory overreach, an overt attempt to redefine established legal standards through litigation and expand the SEC’s jurisdiction in a transparent manner.” “We are confident in our position that the SEC does not have authority to regulate software interfaces like MetaMask.”