In a legal confrontation, Ripple’s Chief Technology Officer (CTO) David Schwartz indirectly expressed his support for Consensys Software Inc. following the lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against the company. The SEC claims that Consensys has been operating as an unregistered broker.
The U.S. Securities and Exchange Commission’s claims
accuse
Consensys of unregistered offering and sale of securities through the MetaMask platform, specifically targeting the platform’s swaps and staking features. In the complaint filed on Friday, June 28, it is alleged that Consensys’ activities through MetaMask constitute unregistered securities transactions. The SEC asserts that MetaMask swaps and staking involve pooling of assets with an expectation of profits derived primarily from the efforts of others, which classifies these activities as securities transactions requiring registration.
In
response
to the lawsuit, Ripple’s Chief Technology Officer David Schwartz defended Consensys in a series of posts on X (Twitter). He opposed the arguments suggesting that MetaMask’s services qualify as securities due to the expectation of profits derived from Consensys’ efforts.
He further explained that an agreement for providing management and transfer of funds services, where the shared profit is entirely outside the agreement and not due to the efforts of any of the parties, does not constitute an investment contract. According to Schwartz, the profits generated by MetaMask’s services are due to external market conditions and user activities, not Consensys’ efforts.
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Schwartz also commented on the ongoing token versus securities debate, stating:
If all people who hold the asset perform actions” is a common enterprise, then everything is a security. Tokens managed through smart contracts cannot make all holders a common enterprise.
The broader regulatory landscape also noted a development, as District Judge Amy Berman Jackson agreed with Judge Torres’ position on programmatic and secondary sales of
XRP
. In the Binance vs. SEC case, Judge Jackson dismissed the SEC’s claims regarding secondary sales of
BNB
by entities not affiliated with Binance. This decision sets an important precedent for ongoing cryptocurrency-related lawsuits in the U.S.
Companies like Coinbase, Consensys, and Kraken are expected to leverage this decision to strengthen their positions in respective lawsuits. With this decision, SEC lawyers can no longer argue that Judge Torres’ perspective on secondary sales lacks judicial support or acceptance, potentially shaping the future regulatory environment for cryptocurrencies in the U.S.
