SEC Backs Down: Consensys Wins Battle Over MetaMask Lawsuit

The SEC has dropped its lawsuit against Consensys, ending an eight-month case over MetaMask and staking services.

Blockchain firm Consensys has come out of an eight month legal battle with the U.S. Securities and Exchange Commission (SEC) which agreed to dismiss its lawsuit. Founder of Consensys Joseph Lubin further confirmed that the SEC would also close investigations against MetaMask, the company’s decentralized crypto wallet.

While the dismissal is expected, it still requires final approval. The SEC has not yet issued an official statement, but Lubin said a formal court filing is expected soon.

I'm pleased to announce that Consensys and the SEC have agreed in principle that the securities enforcement case concerning MetaMask should be dismissed. Subject to the approval of the Commission, the SEC will file a stipulation with the court that effectively closes the case.…

— Joseph Lubin (@ethereumJoseph) February 27, 2025

SEC Accused Consensys of Operating Without Registration

The SEC sued Consensys in June 2024, alleging that the company acted as an unregistered broker by providing staking services through MetaMask. Regulators claimed that third-party staking qualified as a securities offering because users invested funds with an expectation of returns.

The lawsuit was part of a broader push to regulate digital assets under previous SEC leadership. Consensys was among several crypto firms targeted as the agency sought to enforce securities laws in the industry.

New SEC Leadership Reassesses Crypto Policies

Recent leadership changes at the SEC have led to a review of its regulatory stance on digital assets. Reports indicate that the agency, now under Commissioner Mark Uyeda, has been consulting industry experts to gain a better understanding of staking and its legal status.

Lubin welcomed the case dismissal, stating that while Consensys was prepared to fight the lawsuit, the outcome suggested a shift in approach. “We were fully ready to fight this case, but it is encouraging to see a different approach from regulators,” he said.

XRP Community Pushes for Ripple Case to Be Dropped

The SEC’s decision to drop its case against Consensys comes after cases and investigations into Coinbase, Robinhood, Gemini, and OpenSea were all dropped. As the SEC case continues, pleas of the XRP community for the SEC to drop its case have increased in intensity.

The recent dismissed cases aside, the Ripple lawsuit remains open. Some industry figures have questioned why the SEC is continuing to pursue Ripple when it has pulled out of other cases.

However, the SEC hasn’t said if it will step back from its legal actions against Binance and Kraken. Neither case is close to being resolved.

Consensys Challenged the SEC Over Ethereum

Consensys started legal proceedings against the agency in April 2024 before the SEC dropped its suit. The firm had also sued the SEC over its supposed plans to class Ethereum (ETH) as a security.

The Consensys lawyers argued this would grant the SEC too much power in regard to overseeing cryptocurrency, and could even make normal ETH activity illegal. They first pulled earlier statements by former SEC Chair Gary Gensler, who said in 2018 that ETH was not a security.

The SEC ended its inquiry of Ethereum in June 2024. Lubin suggested that Consensys’ lawsuit, which would have featured Gensler’s earlier comments, coloured the choice.