The SEC regards Lido and Rocketpool staking services as unregistered securities. This is consistent with a recent trend of litigation against cryptocurrency companies.
Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC), has recently claimed that prominent decentralized finance (DeFi) initiatives such as Lido and Rocket Pool constitute securities. This action is the latest in a series of legal actions against significant crypto entities, such as Uniswap, Kraken, Coinbase, Metamask, and Robinhood. On Friday, the market responded to new regulatory challenges confronting staking services by experiencing steep price declines in Lido DAO (LDO) and Rocket Pool (RPL). LDO fell 15% and RPL fell 10%.
The Securities and Exchange Commission (SEC) has submitted a complaint against ConsenSys for purportedly engaging in the unregistered sale and offer of securities. Lido and Rocket Pool, which provide liquid staking tokens such as stETH and rETH, have reportedly been able to sell unregistered securities through ConsenSys since January 2023. It is possible to readily trade and utilize these tokens, in contrast to traditional staked assets. According to the Securities and Exchange Commission (SEC), ConsenSys is violating the law by acting as a broker for these transactions and neglecting to register as mandated.
In spite of the allegations, Rocket Pool and Lido have not submitted a registration statement to the Commission for the offer and sale of these investment contracts. This failure to comply has placed these enterprises directly in the SEC’s sights.
ConsenSys responded to the SEC’s allegations by accusing the agency of regulatory overreach and an anti-crypto agenda. The company characterized the most recent charges as a continuation of the agency’s unjust enforcement actions against the crypto industry.
Ryan Sean Adams, a crypto investor and expert, contends that these regulatory measures are part of a more comprehensive, systematic effort to undermine the cryptocurrency industry, which is widely popular among crypto users in the United States. He is of the opinion that Gensler’s assertive approach could have a detrimental impact on these cherished initiatives and could potentially impede the expansion of the crypto sector.
Adams contends that these regulatory actions are motivated by political considerations. He asserts that Gensler’s strategy could potentially alienate marginal voters and have a detrimental effect on President Biden’s chances of reelection. Adams further posits that Biden is not directly overseeing these policies; rather, they are indicative of a broader policy of administrative state expansion and control.
He also says that Democrats could have taken a more positive view of cryptocurrency earlier in the year, but they have missed their chance.
In the cryptocurrency industry, the SEC’s lawsuit against ConsenSys is part of a more extensive assault on staking services. Kraken settled for $30 million and discontinued its staking services for U.S. clients in February of this year, following the SEC’s successful lawsuit against the exchange.
Also Read: A Nigerian official is advocating for the use of blockchain and AI to combat illicit financial flows
Wallets