SEC Targets Ethereum Liquid Staking

The lawsuit alleging Lido and Rocket Pool are violating securities laws comes less than two weeks after the SEC dropped its Ethereum investigation.

The SEC has filed a lawsuit against blockchain software firm Consensys, claiming that Lido and Rocket Pool’s liquid staking programs constitute unregistered securities.

The lawsuit targets Consensys, alleging that the company offers these securities in unregistered transactions through its “Metamask Staking” platform.

Lido and Rocket Pool are two of the largest liquid staking protocols on Ethereum and hold a combined $37.6 billion in staked TVL, per DeFiLlama. The protocol’s native tokens fell promptly, with LDO plummeting 12% in 30 minutes.

This news comes just 10 days after the SEC notified Consensys that it was closing its ongoing investigation into Ethereum 2.0 and that the agency would not be pursuing enforcement action against Consensys.

Consensys’ public letter following the investigation’s closure implied that its legal battle with the SEC was far from over.

The firm stated, “It is imperative that the SEC abandon its unprincipled and opaque regulation by enforcement campaign in favor of much-needed regulatory clarity for an industry that serves as the backbone to countless new technologies and innovations.”