Metamask Faces Legal Disputes, Web3 Industry Development Faces Challenges

As the industry pays attention to the U.S. Securities and Exchange Commission ( SEC )'s stance on ETH ETFs, the SEC suddenly filed a lawsuit against the blockchain technology company Consensys on June 29. The SEC accuses Consensys's products MetaMask of violating securities laws through its Swap and staking features, and categorizes Lido and Rocket Pool's liquid staking tokens stETH and rETH as unregistered "securities."

This news has caused a strong reaction in the industry. Data shows that the market sentiment indicators for Lido and Metamask have both dropped significantly. Lido fell from 21 to -9, while Metamask plummeted from 33 to -69, with market sentiment shifting from positive to extremely negative.

The price of the coin fluctuated as well. On the day the lawsuit news was announced, the price of Lido dropped from a high of $2.43 to a low of $1.86, a decline of over 23%.

As the most widely used wallet for Web3 users and an important participant in the ETH staking field, the legal challenges faced by Metamask and Lido will undoubtedly cast a shadow over their own development and the overall prospects of the industry.

ConsenSys and SEC: Ongoing Legal Dispute

On April 25 of this year, ConsenSys filed a lawsuit in the Northern District Court of Texas due to the SEC's attempt to classify Ethereum as a security. ConsenSys believes that the SEC's action lacks legal basis because Ethereum does not possess characteristics of a security, and the SEC had previously made it clear that Ethereum is not within its jurisdiction.

Origin of the Event

On April 10, the SEC issued a "Wells Notice" to ConsenSys, indicating that it would initiate enforcement action regarding alleged violations of federal securities laws related to the MetaMask Swaps and Staking products. This notice allows the investigated party to present a defense before the SEC makes a final decision.

Controversy Focus

The SEC believes that features related to MetaMask involve unregistered securities trading, which violates federal securities laws. ConsenSys, on the other hand, insists that Ethereum should not be considered a security, and that MetaMask features do not constitute securities trading.

The SEC's lawsuits are usually based on the following points:

1. Unregistered securities offering: Accusation that certain token issuances have not followed the registration requirements of U.S. securities law.

2. Misleading investors: Claiming that there was insufficient disclosure of information during the issuance process, which prevented investors from fully understanding the risks.

potential impact

If the court rules that Ethereum is a security, it will have a significant impact on exchanges and large institutional holders, and may affect the approval process for ETH ETFs. ConsenSys believes that the SEC's overreach in regulating ETH will severely harm the Ethereum network and the company itself.

This lawsuit may have widespread implications:

• Regarding ConsenSys: If the allegations are substantiated, the company may face substantial fines, compensation, and business rectifications.

• For the cryptocurrency industry: It may become a landmark event for the SEC to strengthen regulation, prompting more companies to reassess their compliance status.

• Market reaction: It may trigger short-term market volatility, especially for projects and tokens related to ConsenSys.

The contradiction escalates

In the previous lawsuit, ConsenSys questioned the SEC. On June 18, the SEC gave a vague response, stating that it does not currently recommend taking enforcement action against ConsenSys, but has not abandoned the investigation.

Legal Advisor's Opinion

ConsenSys legal advisor Laura Brookover stated that the entire investigation has concluded, but that does not mean the SEC will not file lawsuits against other Ethereum-related parties.

Controversial Voices

Some opinions suggest that the SEC's statement does not mean the investigation is completely over. Enumma founder David Barrera pointed out that according to the SEC's Enforcement Manual, the conclusion of an investigation is not equivalent to the termination of the investigation.

Industry Impact

The SEC's lawsuit against ConsenSys seems to have become a settled matter, but the industry is more concerned about whether this will impact the approval of Liquid Staking, Restaking, and ETH ETFs. Laura believes that these activities fall within the scope of independent investigations and do not affect the conclusion of the Ethereum 2.0 investigation.

Summary

Although the details of the lawsuit have not been fully disclosed, it is certain that the integration of Web3 with the real world is becoming increasingly close, and relevant regulations and regulatory bodies can no longer exclude Web3. This trend is worth our confidence.

The dispute between the SEC and ConsenSys highlights the complexities of the cryptocurrency industry in terms of law and regulation. In the future, finding a balance between innovation and compliance will be an important challenge for the entire industry. We hope that the final outcome of this case will provide valuable insights for the healthy development of the industry.