Lido DAO (LDO) dips after SEC goes after Consensys for Metamask services

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  • 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

As a seasoned crypto investor with a keen interest in the Ethereum ecosystem, I find the recent legal action taken by the SEC against Consensys and its affiliated services on Metamask, Lido, and Rocket Pool, to be a concerning development. The allegations of unregistered broker dealer activities and the sale of “thousands of unregistered securities” are serious charges that could have far-reaching implications for the crypto industry as a whole.

As a researcher studying the crypto space, I’d rephrase it as follows: Lido DAO, an Ethereum staking platform that offers liquidity solutions, drew significant attention during the day when the US Securities and Exchanges Commission (SEC) announced legal actions against Consensys. The SEC is a key American regulatory body, and their press release disclosed this development.

The regulatory body imposed measures against the blockchain development firm due to certain product listings on Metamask, a widely-used Ethereum wallet created by Consensys. The Securities and Exchange Commission (SEC) claims that Consensys has been involved in unspecified infractions.

“MetaMask offers unregulated trading of securities through two services: Staking and Swaps, functioning without registration as a broker in these transactions.”

Significantly, there have been anticipations in the cryptocurrency sphere that the SEC would initiate legal proceedings against Consensys. The company had previously received a Wells Notice in April concerning Metamask, and more recently, they announced that an action regarding Ethereum was improbable.

SEC concurrently takes aim at Lido and Rocket Pool

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Additionally, the regulatory body specifically targeted Lido (LDO) and Rocket Pool (RPL) among liquid staking protocols in its criticism. Consensys was accused of functioning as an “unlicensed broker-dealer” by offering services to these platforms.

Read Lido DAO’s [LDO] Price Prediction 2023-24

Significantly, Metamask’s Staking Service enables users to stake via Lido and Rocket Pool, thereby attracting scrutiny from the SEC towards these protocols. Moreover, the regulatory body has asserted that the blockchain firm has amassed over $250 million in fees through unregistered brokerage activities. The commission stated,

As a crypto investor, I’ve come across the news that ConsenSys has acted as an intermediary, facilitating the sale of tens of thousands of unregistered securities on behalf of liquid staking program providers Lido and Rocket Pool. These providers create and issue liquid staking tokens, such as stETH and rETH, in exchange for investors’ staked assets. Essentially, they allow investors to earn rewards and maintain liquidity while their assets are staked, which is a crucial aspect of the Ethereum 2.0 staking mechanism. However, it’s important to note that these securities have not been registered with the Securities and Exchange Commission (SEC) or any other regulatory body, potentially posing risks for investors. Always do your own research before investing in such opportunities.

The objective behind this move negatively impacted the value of LDO and RPL coins. Immediately following the announcement of the legal action, their prices dropped by a significant 10%.

Read moreBitcoin halving could be a ‘sell-the-news’ event, at least for a few months

At the current moment, based on CoinMarketCap data, LDO was priced at around $1.98, slightly under the $2 threshold. Prior to recent news, LDO was exchanging hands at approximately $2.30. The coin boasted a substantial trading volume of over $232 million, yet experienced a significant decrease in value, amounting to over 15%, within the past 24 hours.

Simultaneously, RPL experienced a setback, with the cryptocurrency registering a decline of more than 8% at current market prices. At the present moment, the coin was priced at $18.89 and had a trading volume exceeding $7 million. It’s worth mentioning that the coin had been valued above $20 prior to the SEC declaration, signifying that it is still in the process of regaining its previous value.

Additionally, the commission asserted that certain coins listed on Metamask were identified as securities. Specifically named were Polygon (MATIC), Luna (LUNA), Chiliz (CHZ), The Sandbox (SAND), and Decentraland (MANA). It is worth mentioning that some of these coins have previously been the subject of SEC scrutiny in past legal proceedings.

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2024-06-28 21:59