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Lido and Rocket Pool tokens tank after SEC sues Consensys

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2 days ago

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Lido DAO (LDO) and Rocket Pool (RPL) prices are sharply down on Friday. At the time of writing, LDO and RPL are 15% and 10% in the red respectively, with these losses coming as the market reacts to latest regulatory related news.

Ethereum (ETH) price also slipped, shedding nearly 3% while Maker (MKR), Uniswap (UNI) and Arbitrum (ARB) also traded lower. The fall can be attributed to the US Security and Exchange Commission (SEC) suing Consensys, the Ethereum software company behind the MetaMask crypto wallet.

SEC sues Consensys after ending Ethereum 2.0 investigation

SEC’s conclusion of its probe into Ethereum 2.0 gave hint that the regulator had flipped its outlook on altcoin. It’s notable that earlier in May, the SEC approved spot Ethereum ETFs for the US market.

However, an overhang still remained – the securities watchdog’s Wells Notice against Consensys. This meant potential enforcement action, with SEC having outlined its view regarding MetaMask, Consensys’ crypto wallet and staking service platform.

Lido and Rocket Pool prices plummet

Lido (LDO) and Rocket Pool (RPL) are some of the Ethereum related cryptocurrencies that surged a few days despite a marketwide dip. The gains followed Consensys’ announcement that the SEC had ended its Ethereum 2.0 probe.

LDO rose from around $1.85 to highs of $2.40 amid the major win for Ethereum, while RPL jumped from $26.50 to above $30.00 as the news added to a confluence of other positive catalysts to propel the altcoins higher.

What the SEC said about Lido and Rocket Pool

In today’s lawsuit, filed at the United States District Court Eastern District of New York, the SEC alleged “Consensys violated the federal securities laws” after it failed to register as a broker dealer and for offering unregistered securities.

“Specifically, Consensys has offered and sold tens of thousands of securities for two issuers: Lido and Rocket Pool,” SEC’s complaint reads.

SEC also said Lido and Rocket Pool staking operations with ETH means investors expect to earn profits, and these come with the two protocols’ managerial efforts.



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consenSys

SEC Sues Consensys Over MetaMask Staking, Broker Allegations

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10 hours ago

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June 30, 2024

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“Since at least January 2023, 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,” the SEC said. “While staked tokens are generally locked up and cannot be traded or used while they are staked, liquid staking tokens, as the name implies, can be bought and sold freely.”



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Consensys Responds to SEC Lawsuit Over MetaMask

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3 days ago

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June 28, 2024

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Following the SEC lawsuit where Consensys is accused of operating as an unregistered broker through its MetaMask software, the firm has issued a response.

The SEC accused MetaMask of carrying out activities similar to securities brokerage without the appropriate registrations through its swap and staking services. Moreover, this legal action, filed in the U.S. District Court for the Eastern District of New York, follows a Wells notice Consensys received in April.

SEC’s Lawsuit Against Consensys

According to the SEC, Consensys, via MetaMask, facilitated over 36 million crypto asset transactions, including 5 million that involved crypto asset securities, without the required registration. These activities are said to have earned Consensys more than $250 million in transaction fees.

The SEC is specifically concerned about MetaMask’s Swaps and Staking services as these, in the view of the regulator, involve the sale of unregistered securities tokens, including CHZ, LUNA, MATIC, MANA, and SAND.

Besides directly facilitating transactions, MetaMask Swaps is alleged to act as an intermediary by searching for the best exchange rates and managing customers’ assets through smart contracts. The staking aspect of MetaMask, which involved collaborations with entities such as Lido and Rocket Pool, reportedly also involved the offer and sale of securities through staking programs that were also unregistered.

As a result of the SEC’s legal actions, Consensys has come out in support of their legal stance, claiming that the SEC cannot regulate software interfaces like MetaMask as brokers. The company has decided to go to court in Texas for this very matter, stressing that this case is not only vital for Consensys but for the entire web3 industry.

Consensys claims that what the SEC has done is to overstep its regulatory mandate and change the legal precedent that has been set. The company has taken the position that as a software interface it does not translate to being a securities broker hence clearing up the allegations.

The legal conflict with the SEC is taking place at the background of the growing pressure from the regulatory authorities on the cryptocurrency market. This lawsuit is similar to other high-profile cases such as the current case against Coinbase. Consensys has also previously sued the SEC in Texas claiming that MetaMask Swaps and Staking are not brokers as they are software tools, with reference to the case SEC v. Coinbase.

Read Also: SEC Sues ConsenSys For Conducting Securities Via MetaMask

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Kelvin is a distinguished writer specializing in crypto and finance, backed by a Bachelor’s in Actuarial Science. Recognized for incisive analysis and insightful content, he has an adept command of English and excels at thorough research and timely delivery.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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Consensys Founder Joseph Lubin Sees End To SEC’s Crypto Hostility Very Soon

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2 weeks ago

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June 20, 2024

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Consensys founder Joseph Lubin recently expressed optimism that the era of regulatory antagonism from the U.S. Securities and Exchange Commission (SEC) towards crypto may soon be over. This sentiment follows the SEC’s recent decision to close its 14-month investigation into Ethereum (ETH), a move seen as a major win for the industry.

Consensys Founder On SEC’s Crypto Tactics

Lubin, in a statement shared by Fox Business journalist Eleanor Terrett on X, conveyed his reaction to the closure of the investigation. He called it a “necessary but not sufficient” step. Moreover, Lubin elaborated, “There has to be a better way to regulate the market than through ambush.”

Furthermore, the Consensys founder expressed, “We are hopeful that the antagonism to crypto among some US regulators is starting to wane and that the national investor protection strategy will evolve from the current guerrilla tactics.” Despite the recent positive development, Consensys announced that it would continue its lawsuit against the SEC, filed in April.

The lawsuit was originally initiated in response to the SEC’s classification of Ethereum as a financial security, which Consensys and much of the crypto industry have vigorously contested. Now, the lawsuit seeks greater legal clarity regarding the regulatory framework for cryptocurrencies. In addition, Lubin underscored the ongoing need for clear regulatory guidelines.

He stated, “Until then, we soldier forth with our litigation against the SEC in Texas because we are intent on achieving more legal clarity for all.” This legal battle aims to address not only the classification of Ethereum but also the broader regulatory environment affecting blockchain technologies and innovations.

Also Read: Ripple CLO Uncovers Key Grey Area In SEC’s U-Turn On Ethereum Probe

SEC Closes Ethereum Investigation

Consensys described the closure of the SEC investigation as a “major win” for the industry. They noted that the agency would no longer pursue charges that sales of Ethereum constituted securities transactions. The investigation began in March 2023 under the direction of Gurbir Grewal, Director of the SEC’s Division of Enforcement.

It aimed to scrutinize individuals and entities involved in buying and selling Ethereum. Hence, a Wells notice issued to Consensys in April indicated the SEC’s intention to bring enforcement action against the company. In addition to its primary focus on Ethereum, Consensys has been vocal about the need for regulatory clarity for other aspects of its operations. This includes its MetaMask Swaps and Staking features.

Furthermore, the company is seeking a judicial declaration that offering these features does not violate securities laws. It emphasized that clear guidelines are essential for the advancement and adoption of crypto technologies. Meanwhile, the SEC’s decision to end its investigation comes at a time of heightened anticipation within the Ethereum community, particularly regarding the potential approval of a Spot Ethereum ETF.

Also Read: ETH Price Surges 5% After SEC Concludes Ethereum Investigation, Whale Activity Rises

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CoinGape comprises an experienced team of native content writers and editors working round the clock to cover news globally and present news as a fact rather than an opinion. CoinGape writers and reporters contributed to this article.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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