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SEC Sues Consensys: Allegations of Unregistered Securities Sales

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On June 28, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Consensys Software Inc. in Brooklyn, New York. The SEC alleges that Consensys, through MetaMask Staking, engaged in the unregistered offer and sale of securities and operated as an unregistered broker.

ConsenSys’s Role in Unregistered Securities Offer

According to the complaint, since January 2023, ConsenSys has been facilitating the sale of unregistered securities for liquid staking program providers Lido and Rocket Pool. These programs provide liquid staking tokens, stETH and rETH, that back the corresponding staked assets and can be freely traded by investors. To this end, the SEC considers that ConsenSys, with its involvement in such transactions, acted as an unregistered broker, a severe violation of securities regulations.

It is further alleged that, since October 2020, ConsenSys has been brokering transactions in crypto asset securities by soliciting investors, information on investments, and facilitating the execution of orders, among others.

Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said:

By allegedly collecting hundreds of millions of dollars in fees as an unregistered broker and engaging in the unregistered offer and sale of tens of thousands of securities, Consensys inserted itself squarely into the U.S. securities markets while depriving investors of the protections afforded by the federal securities laws.

The case has, however, created debate within the crypto community. Jorge Izquierdo, founder of Tuyo, expressed skepticism about the strength of the SEC’s complaint. He argued that providing access to staking via stETH and rETH through non-custodial smart contracts doesn’t fundamentally differ from offering a user interface for typical swaps.

Izquierdo noted that the SEC’s focus on these transactions while leaving out other ConsenSys services like MetaMask Pool and Validators, seemed misplaced. He also discussed Lido’s incentives to drive volume, which was not touched upon in the complaint. Perhaps, he wrote, that the SEC had been planning this case for a while and had simply decided to go ahead and file it now.

As the case rolls out, it reveals a running regulatory tension between supervisory bodies and an extremely fast-paced crypto industry. ConsenSys’s MetaMask, a central tool for getting around decentralized finance, finds itself at the forefront of a legal battle, setting a precedent for the future of crypto regulation.

Related Reading | Shiba Inu Milestone: 35B SHIB Tokens Join Shibarium

FTX Heist Redux: Stolen Ether Moves In Mystery Amidst CEO’s Trial

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In a baffling turn of events, the funds stolen during last year’s $600 million attack on FTX’s wallets have resurfaced just ahead of the impending trial of the exchange’s former CEO, Sam Bankman-Fried. The enigma deepens around the collapse of the prominent crypto exchange.

According to a recent report, the purloined 15,000 ether (ETH), dormant in a wallet linked to the audacious heist, has now traversed through an array of privacy-enhancing tools and bridges. This movement began in earnest over the weekend when an initial 2,500 ETH (equivalent to $4 million) was set in motion. The voyage ultimately led to destinations including the Thorchain bridge, Railgun privacy wallet, and various intermediary addresses.

Subsequently, the remainder of the stolen assets embarked on their journey, with many finding their way to the Thorchain router. Some funds also stopped at a contract cryptically labeled “Metamask: Swap Router.”

The Railgun privacy wallet is a bastion for users seeking to safeguard tokens and engage in decentralized financial activities, such as lending and borrowing. Transactions within this ecosystem are veiled, shrouding the precise utilization of these funds. Conversely, Thorchain operates as a conduit, allowing users to seamlessly exchange tokens across diverse blockchains, free from interference concerns.

FTX’s $32 Million Ether Surge

According to recent evaluations, the addresses associated with the hack may have been used to transfer more than $32 million worth of ether through THORChain. This sudden influx of funds emerged when Sam Bankman-Fried was about to go on trial, casting a shadow over the unresolved mystery surrounding FTX’s catastrophic collapse last year. The culprits behind the attack are still unknown.

After the breach, several addresses amassed diverse tokens, including ETH and the dai (DAI) stablecoin, consolidating them into a staggering 37,000 ether. At its zenith, the address held an excess of 288,000 ether, securing its position as the 35th-largest holder of the cryptocurrency.

Federal prosecutors levied charges against Bankman-Fried last year, accusing him of two counts of wire fraud and five counts of conspiracy to commit various forms of fraud. These legal actions transpired mere weeks after his resignation from the helm of FTX, which coincided with the exchange’s bankruptcy filing.

Related Reading: | FTX Hack Perpetrator Resurfaces With $4M Moves Amidst Ethereum ETF Excitement

MetaMask Unleashes “Sell” Magic: Turning Crypto Into Cash With Ease

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Renowned cryptocurrency wallet provider MetaMask has taken a significant step in simplifying the process of converting digital assets into traditional fiat currencies by introducing its latest feature, ‘Sell.’ 

This addition transforms how users interact with their crypto holdings, allowing for easier and more seamless conversions into currencies such as USD, EUR, and GBP.

The unveiling of the ‘Sell’ feature is part of MetaMask’s broader mission to democratize access to Web3 capabilities, marking a strategic move towards enhancing the user experience within the crypto space. 

Initially available in select regions, including the United States, the United Kingdom, and Europe, MetaMask has ambitious plans to expand its reach to encompass a wider geographical footprint.

This plan also aligns with the company’s mission to democratize access to Web3 capabilities. For now, this feature supports ETH on the Ethereum Mainnet; it will then encompass native gas tokens on L2 networks.

One of the distinct aspects of this feature is its collaborative approach. MetaMask doesn’t rely on a single service provider; instead, it curates a selection of reputable and verified providers to present users with real-time options for converting ETH on the Ethereum Mainnet into their desired fiat currency.

Users must have to connect their MetaMask wallet to the desired platform found at portfolio.metamask.io to use this feature. However, the announcement post contains a go-through guide for users to use “Sell.”

MetaMask’s Strategy to Enhance Web3 User Experience

On July 17th, the company introduced the “Buy” feature, available to users in 189 countries, with 90+ tokens available to purchase across 10+ networks. Additionally, payment methods are available, including debit or credit card, PayPal, Bank Transfer, and others.

However, by complementing the existing ‘Buy’ feature, the company aims to establish a comprehensive web3 experience that reduces intermediaries and facilitates quicker conversions to fiat, including bank accounts and PayPal balances.

The company said in the announcement post:

The integration of the ‘Buy’ and ‘Sell’ features creates a seamless loop for users in their crypto-to-fiat journey. With shared providers, the need to sign up and link bank accounts repeatedly is minimized, streamlining the experience and offering greater flexibility.

However, MetaMask is well-positioned to play a pivotal role in the ongoing evolution of decentralized finance and Web3 technologies as they continue to expand their reach and support additional networks.

Related Reading | Bitcoin Maintains Remarkable Stability in 2023: A Decade of Low Volatility

Crypto Tax Myth Busted: No, MetaMask Won’t Hold Your Funds for Taxes

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ConsenSys, the creators of the well-known MetaMask web-based cryptocurrency wallet, have responded to misleading tweets that contain inaccurate information about ConsenSys’ terms of service. They want to clarify that MetaMask does not gather taxes on cryptocurrency transactions, and they haven’t implemented any modifications to their terms to enable such actions.

According to the company’s explanation, the tax clause in their terms of service is categorized within the ‘fees and payment’ section, specifically relating to ConsenSys’ products and paid plans. It’s important to note that this section, which may contain intricate legal language, does not apply to MetaMask or any other products that do not involve sales tax.

In response to multiple Twitter posts that brought attention to section 4.2 of MetaMask’s terms of use, alleging it as a modification that enables the company to retain taxes, the company issued a clarification. This claim rapidly gained traction on Reddit’s r/CryptoCurrency forum, accumulating 450 upvotes and over 500 comments, as well as being disseminated on various crypto news websites and YouTube.

A tweet that went viral boldly proclaimed the demise of decentralization.

Numerous individuals drew comparisons between the speculated modification and the recent controversy surrounding Ledger’s introduction of the Ledger Recover feature for its hardware wallets, which some criticized as a potential “backdoor” compromising its purportedly secure design. “Why should Ledger have exclusive rights to such controversies?” questioned Kashif Raza, the founder of Bitinning, a Bitcoin education provider. “MetaMask is now joining the party!”

Crypto Community

Numerous members of the cryptocurrency community swiftly reacted and refuted the assertion. “@printer_brrr,” the curator of the Toddler Art NFT collection, chastised those who blindly tweeted about the MetaMask tax clause in the terms of service without actually reading it. They clarified that if an individual purchase a product from MetaMask, the company may withhold applicable taxes, such as sales tax, similar to how Amazon operates when you make a purchase from them.

The highest-rated comment on Reddit aimed to debunk the rumor, clarifying the context of the mentioned clause. The user, using the pseudonym Mr. Literal, explained that the reference was likely related to sales taxes rather than capital taxes. They further elaborated that when making online purchases with credit or debit cards, various countries and states may have distinct regulations regarding sales tax.

ConsenSys reaffirmed its dedication to transparency and accuracy in communicating information to its users via a tweet. They emphasized their unwavering commitment to combat misinformation regarding their products and services.

Metamask Says, No Wallet Exploit Found In $10 Million Hack

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The popular Ethereum wallet, MetaMask, has issued a statement stating that no wallet exploit was used in the recent $10 million hack. On April 15th, a hack was carried out that compromised the NFT marketplace, Nifty Gateway, a major NFT marketplace.

According to MetaMask, the investigation indicated that the breach was the result of a phishing effort that targeted a Nifty Gateway employee, granting the hacker access to the company’s infrastructure. No vulnerability or attack was discovered in the Meta wallet.

Metamask Clears Wallet Exploitation Of Loss Of Funds

On April 18, Meta Mask tweeted in response to Taylor Monahan, the founder of Ethereum wallet manager MyCrypto, who stated on April 17 that an unnamed wallet-draining vulnerability has stolen over $10.5 million in crypto and nonfungible tokens (NFTs) since December 2022

“Recent reporting on [Monahan’s] thread has incorrectly claimed that a massive wallet-draining operation is a result of a MetaMask exploit,”

MetaMask stated that the 5,000 ETH was drained from several addresses across 11 blockchains, implying that the claim about the assets being accessed due to a meta wallet vulnerability is false.

The security team at MetaMask revealed that they had been working nonstop to find the attack’s origin. Additionally, they are working with other teams in the Web3 wallet industry to unravel the mystery of the significant attack.

Monahan said that “no one knows how” this huge attempt was carried out in her post on the issue, but that her “best guess” was that a sizable amount of old data was retrieved and used to take the funds.

She initially claimed that the attacker was utilizing Meta Mask to eliminate expert users and staff members.

Later, Monahan claimed that the issue is not limited to Meta and that “users of all wallets, even those created on a hardware wallet,” have been affected.

A member of the cryptocurrency community named Jacky Goh stated that users switched to hardware wallets as a result of the breach. Goh pointed out that the anonymous breach serves as a reminder for consumers to store their cryptocurrency assets in a more secure manner. 

Ohm Shah, a co-founder of Wallet Guard, stated in a speech that although the MetaMask team has been conducting ongoing research, the specifics of the hack are still unknown. Shah mentioned that the inquiry into the enigmatic large-scale getting involves a number of more independent security researchers.

Shah continued by saying that although there isn’t any verified information on the disappearance of digital assets, speculation is beginning. They thought there might be some seed phrase or private key leakage. 

ETHUSDT 2023 04 20 01 03 22
Source: Tradingview.com

Related Reading: | MetaMask Brings NFTs To Browser Extension In Latest Update|

MetaMask Brings NFTs To Browser Extension In Latest Update

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In a significant update, MetaMask has announced the arrival of non-fungible tokens (NFTs) on its browser extension. The latest version of the extension, v10.28, will bring an NFT view that will enable the automatic detection of ERC-721 and 1155 tokens.

Users of the popular Ethereum wallet and browser extension have highly anticipated the NFT feature. The ability to send ERC-721 tokens will be a major game-changer for those involved in the booming NFT market.

According to the tweet, the new update will enable all ERC-721 and 1155 tokens to appear on the extension as long as automatic NFT detection is enabled. While ERC-721 token sending is already enabled, ERC-1155 token sending will be added soon.

Despite the convenience of the NFT feature, users are cautioned to exercise caution and diligence in their transactions, as all transactions made on the blockchain are still irreversible.

However, integrating NFTs on the MetaMask browser extension is just one example of how blockchain technology continues to evolve and offers new possibilities. 

Nevertheless, with the growing popularity of NFTs, the ability to send and receive them seamlessly on MetaMask will undoubtedly be a welcome addition for many in the community.

Community Response To MetaMask’s Latest Update

MetaMask’s latest update has caused a buzz in the community, with many weighing in on the news. While some have expressed excitement and enthusiasm, others have highlighted areas for improvement.

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One community member expressed frustration with the app’s load time, asking if it could be fixed. Another user congratulated on the release but suggested that the user interface could be improved significantly.

Others were thrilled to see them catching up with their competitors and encouraged the team to keep building and launching a DAO soon. The sentiment was echoed by many, with some praising MetaMask for making Web3 easy.

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One user playfully compared the team to Internet Explorer, calling them fast. Another asked why it took so long for MetaMask to integrate NFTs into its platform, while others eagerly anticipated seeing their Bezogi’s in MM and the upcoming $mblk IDO.

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The prospect of seeing OverworldPlay NFTs in MetaMask was also exciting, with many NFT enthusiasts celebrating the integration of NFTs into the platform.

However, MetaMask’s latest update has generated a lot of buzz in the community, with many eagerly anticipating the platform’s future. 

While there are areas for improvement, integrating NFTs is a step in the right direction for the popular Ethereum wallet and browser extension.

Related Reading |  Immunefi Report Reveals BNB Chain As Top Target For Rug Pulls In Q1 2023 

MetaMask Boosts: Sign In With Ethereum & Domain Binding Feature

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MetaMask, the world’s leading Web3 wallet support, has announced that it is now compatible with EIP-4361, also known as Sign In with Ethereum. The wallet’s implementation includes a “domain binding” feature that can detect signatures and approvals from malicious URLs. The addition of this feature could significantly reduce the risk of phishing attacks.

In a recent tweet, MetaMask announced that it has partnered with SpruceID, the toolkit for decentralized identity, to implement this feature. The company supports SpruceID’s efforts to help users control their identity and data across digital interactions.

The community’s response to the tweet has been mixed. Some people have praised the move, with one user calling it “amazing news.” Others have expressed frustration with their token airdrops and have asked when MetaMask’s own airdrop will occur.

One user wrote, “Wen $Mask airdrop?” while another said, “Sorry but I have to ask this, ‘wen airdrop see?'” However, it seems that MetaMask is not currently planning an airdrop.

Despite the mixed reactions, many users are excited about the possibilities that its new feature could bring. One user asked when the wallet will support NFT domains from Unstoppable Web, saying that they are “burning hot” in the digital identity space.

However, the addition of the “domain binding” feature to MetaMask’s wallet could have a significant impact on the security of its users’ data and assets. The partnership with SpruceID is another step in the company’s ongoing efforts to make confirmations more legible to its community.

MetaMask Launches Staking Marketplace: Four Vendors To Manage Ethereum Staking

Moreover, MetaMask Institutional has announced the launch of a staking marketplace for its institutional clients, providing an avenue for the creation of new Ethereum validators. The marketplace will allow institutions to manage Ether staking through four vendors, including ConsenSys Staking, Allnodes, Blockdaemon, and Kiln, simplifying the complexity of institutional staking. 

MetaMask Institutional has been live since October 2021, offering a platform with a wider set of controls and functionality more suited to organizations and businesses. The launch of the staking marketplace will coincide with the rollout of an advanced dashboard, including institutional controls, portfolio management, digital asset monitoring, and transaction reporting. 

The move comes amid a shift from liquid staking to 32-ETH staking, with Ethereum’s Merge and Shanghai/Capella upgrades on the horizon. MetaMask Institutional’s staking marketplace aims to simplify access and management of solo staking, enabling institutions to become Ethereum network validators. 

The service’s focus is to solve for Eth2 staking, given the importance of data validation of Ethereum in the present and future. MetaMask Institutional rolled out access to ETH LP pool staking through Lido and Rocket Pool protocols in January 2023, giving institutions initial access to DeFi pool staking.

Related Reading | Bitcoin Mining Difficulty Hits Record High Reviving Miners’ Fortunes In Q1 2023

Shiba Inu’s Project Lead Reacts To MetaMask SDK Feature

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Lead developer of the Shiba Inu ecosystem Shytoshi Kusama tweeted “!” to the launch of the MetaMask SDK in the Unity Asset Store.

Recently, the leading Ethereum wallet has integrated the gaming developer platform Unity which will allow developers to create innovative experiences with the help of web3 tools.

The newest addition is seen as a major step forward in enabling decentralized applications and gaming and making them accessible to the masses.

The announcement is reflective of the growing importance of the web3 gaming sector. The potential for growth is enormous given that one million users connect to web3 games every day over 48 blockchains.

The Shiba Inu community has reacted favorably to Kusama’s comments, with people expressing enthusiasm for the new MetaMask SDK feature’s potential. One person referred to it as “huge,” and another questioned how it related to the meme coin.

It needed to be recalled that the Shiba Inu team introduced Shiba Eternity, a collectible card game in a bid to add more utility to the memetoken’s ecosystem on Oct 6, 2022.

Created by Melbourne-based PlaySide Studios, the game features a Japanese martial arts theme that draws heavily from the Shiba Inu ecosystem. In the game, each player has a Shiboshi, a virtual dog that they are responsible for keeping safe from other players.

Overall, the launch campaign was a success as the game managed to top the charts for card games on the app store.

Shiba Inu Holders Are On The Rise

Prior to the anticipated release of Shibarium, a layer-2 solution that intends to enhance the Shiba Inu ecosystem by delivering speedier transactions at a reduced cost, among other significant enhancements, the number of Shiba Inu owners has been increasing.

Yet, there are still a number of unanswered questions regarding the use and release of Shibarium.

In order to perform transactions on the Shibarium ecosystem, Shibarium will collaborate with Ethereum. Processing it on the Shibarium chain will need a sizable portion of the transaction load the Shiba Inu ecosystem now places on Ethereum.

The layer-2 will also remove tokens from circulation in order to restrict supply and support price growth. Sending tokens to wallets that can only receive tokens but not send them, also known as Dead Wallets, is referred to as a token-burning method.

Shibarium will use $BONE instead of $SHIB as payment for transactions.

Ethereum Non-Custodial Wallet Apprises Users Of A New “Poison” Scam

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Ethereum non-custodial wallet MetaMask has issued a warning about a new emerging scam where malicious actors “poison” users’ transaction histories.

In a series of tweets, the web3 wallet explained how the “address poisoning” exploit is employed by scammers.

First, users are sent tokens worth $0 to their wallets which the attackers make copies of using vanity address generators. These fake ones have identical first and last characters of their targeted victim’s wallet address, laying the perfect trap for unsuspecting users.

Even though hackers would not able to gain access to the customer’s wallets, those with the habit of not verifying the wallet address from the transaction history might find themselves in trouble.

MetaMask appealed to users against simply copying from the history and urged them to double-check every single character of the wallet address to ensure the funds are sent to the correct wallet.

Earlier on May 2022, MetaMask wallets became the target of a Phishing scam after malicious pop-ups emerged in crypto data aggregator CoinGecko that prompted users to connect their ETH wallets.

That said, the leading crypto wallet recently announced terminating its ties with Wyre amid reports of the crypto payment platform planning to wind down operations in the near future.

MetaMask took to Twitter on Jan. 5 to state that it has removed Wyre from its mobile aggregator, which allows users to buy crypto directly through its digital wallet.

“We’re currently working on extension removal and appreciate your patience,” MetaMask said, asking users not to use Wyre on the mobile aggregator.

In accordance with the notice issued, MetaMask also stated that it continues to extend support to a wide variety of payment gateways, including Transak, MoonPay, and Sardine. Per MetaMask, the services are accessible through transfers, bank cards, and Apple Pay.

Ethereum Gains Further Utility

Last year, the digital payments giant PayPal teamed up with MetaMask parent firm ConsenSys to allow MetaMask users to purchase and transfer Ethereum. 

In 2020, PayPal started letting users buy Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. In May of this year, they announced intentions to expand their services to let users transfer that cryptocurrency into third-party wallets.

MetaMask is only compatible with Ethereum Virtual Machine [EVM] supported blockchains. Joseph Lubin, chief executive officer of ConsenSys is also a co-founder of Ethereum.

Ethereum: MetaMask Leverage PayPal For Seamless ETH Transaction

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Ethereum will be now integrated via PayPal, MetaMask Wallet’s parent firm ConsenSys announced in a blog. MetaMask, a crypto wallet interacting with the ETH blockchain, boasts to be the first Web3 wallet to leverage PayPal to drive more successful on-ramp transactions.

Lorenzo Santos, Product Manager for MetaMask, added, “This integration with PayPal will allow our U.S. users to not just buy crypto seamlessly through MetaMask, but also to easily explore the Web3 ecosystem.” 

For now, the new functionality is available to selected U.S. users which would be rolled out to all eligible U.S. customers in the coming weeks.

The MetaMask and PayPal collaboration is the latest attempt aimed at improving and diversifying payment options for users within the MetaMask app. 

To add crypto to the MetaMask wallet with PayPal one needs to log in to the app first and click on the Buy button, then select ‘PayPal’. By entering the desired dollar amount worth of ETH to add to your wallet; the user will be redirected to PayPal to log in.

There one can purchase crypto via PayPal, or send it without buying more. 

ConsenSys caused a huge outcry in the Ethereum community after the latest update in its privacy policy required it to collect users’ IP and wallet addresses while sending a transaction. 

Ethereum Wallet’s Latest Privacy Policy Caused Uproar

As reported by TronWeekly, ConsenSys MetaMask’s RPC [Remote Procedure Call] node Infura would collect the user’s IP address as well as wallet address while sending a transaction.

MetaMask [by default] utilizes Infura to get information on and off of blockchains. However, ConsenSys in a blog post downplayed the changes.

It said that only “clarity in relation to the information collected by Infura when users use Infura as their default RPC provider in MetaMask” was provided.

“The updates to the policy do not result in more intrusive data collection or data processing and were not made in response to any regulatory changes or inquiries”.

“Our policy has always stated that certain information is automatically collected about how users use our Sites and that this information may include IP addresses”, ConsenSys stated.

That said, Infura is vital to the Ethereum blockchain. The tool is used by many other notable Web3 projects such as Polygon, Filecoin, Aragon, Gnosis, and OpenZeppelin.