The offensive and defensive battle between ConsenSys and the SEC may be related to the future of DeFi

Author: Rhythm BlockBeats

On April 10, the U.S. SEC issued a “Wells Notice” to the Ethereum infrastructure development company ConsenSys. ), meaning the SEC gives the company a final chance to rebut any allegations. The SEC said that by providing the MetaMask wallet software, ConsenSys was acting as an unregistered securities broker.

In response, ConsenSys denied that it acted as a broker and said that the wallet was "simple and user-friendly" and "neither holds customers' digital assets nor performs any transactions." Function".

On April 26, ConsenSys decided to preemptively file a lawsuit with the SEC, accusing it of "illegal power seizure" of Ethereum. To this end, ConsenSys founder Joseph Lubin solicited DEGEN in Farcaster and stated that any DEGEN tip received will be used to defend the Ethereum ecosystem. A large number of members of the crypto community have participated in tipping to express their support.

The MetaMask wallet created by ConsenSys provides users with all the infrastructure they need to explore web3, from managing their identity, sending and receiving cryptocurrencies, to connecting to establishing Decentralized applications on Ethereum and more. According to Consensys’ lawsuit, MetaMask, an application that allows people to buy, sell and transfer Ethereum on their own, is not a securities broker, and MetaMask’s staking service does not violate securities laws.

At the same time, ConsenSys believes that declaring MetaMask a securities broker will effectively prevent web3 developers from continuing to build next-generation applications on their own and will prohibit the SEC from investigating or taking action related to MetaMask’s redemption or staking capabilities. Prohibition on Enforcement Actions.

MetaMask was notified, which actually hinted at the DeFi crisis

The core controversy of this regulatory turmoil is that MetaMask, as a wallet application, is defined as a securities broker by the SEC.

ConsenSys, the parent company behind MetaMask, also owns development kit Infura, smart contract audit service Diligence, Ethereum Layer 2 Linea, Ethereum client Teku, Besu and other product sections. Perhaps it is precisely because ConsenSys founder Joseph Lubin is one of the co-founders of Ethereum that ConsenSys seems to have inherited some of the genes of Ethereum and uses the encryption vision as a compass for its business layout.

In 2023, ConsenSys’ Linea mainnet was launched, MetaMask Snaps was released, and activities such as the Web3 Fellowship program and Linea DeFi Voyage were launched. In September 2023, in order to better support Web3 builders, ConsenSys announced the closure of its development tools Truffle and Ganache, turning the Truffle team's focus to expanding its Infura, MetaMask Snaps and SDK products.

It can be said that ConsenSys has established a basic framework for the encryption world. After several years of hard work, MetaMask has now become one of ConsenSys’s most successful incubation projects and the wallet with the largest market share today.

But now that the SEC has taken action against MetaMask, it can be seen that the United States has gradually increased regulatory pressure on the entire encryption industry, especially DeFi. If MetaMask is labeled "illegal", perhaps the entire DeFi industry will receive a more severe crackdown.

In addition, in recent months, the SEC has also filed lawsuits against cryptocurrency exchanges such as Binance. US, Binance and Kraken. Even Uniswap, the leader of DEX, received the "Wells Notice" not long ago. Although Uniswap founder Hayden Adams issued an open letter in time to counterattack, the market was still very sensitive to the news, and the price of UNI fell instantly.

In the letter, Hayden mentioned that the team believes that the products it provides are legal, and specifically emphasized Uniswap as an Internet company located in the United States to demonstrate its long-term development path of compliance. At the same time, Hayden also mentioned that this battle with the SEC will last for several years and is ready to appeal to the Supreme Court.

Related reading: "Uniswap, which has always been "protected" by the US courts, is in litigation again. Can it win against the SEC this time? 》

It’s just that ConsenSys was one step ahead and played a counterattack card to the SEC first. Subsequently, companies such as the Blockchain Association and Legit Exchange followed suit and filed similar preemptive lawsuits in an attempt to prevent the SEC from treating certain crypto companies or assets as securities.

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