Lido and Rocket Pool tokens tank after SEC sues Consensys

Lido DAO (LDO) and Rocket Pool (RPL) prices are sharply down on Friday. At the time of writing, LDO and RPL are 15% and 10% in the red respectively, with these losses coming as the market reacts to latest regulatory related news.

Ethereum (ETH) price also slipped, shedding nearly 3% while Maker (MKR), Uniswap (UNI) and Arbitrum (ARB) also traded lower. The fall can be attributed to the US Security and Exchange Commission (SEC) suing Consensys, the Ethereum software company behind the MetaMask crypto wallet.

SEC sues Consensys after ending Ethereum 2.0 investigation

SEC’s conclusion of its probe into Ethereum 2.0 gave hint that the regulator had flipped its outlook on altcoin. It’s notable that earlier in May, the SEC approved spot Ethereum ETFs for the US market.

However, an overhang still remained – the securities watchdog’s Wells Notice against Consensys. This meant potential enforcement action, with SEC having outlined its view regarding MetaMask, Consensys’ crypto wallet and staking service platform.

Lido and Rocket Pool prices plummet

Lido (LDO) and Rocket Pool (RPL) are some of the Ethereum related cryptocurrencies that surged a few days despite a marketwide dip. The gains followed Consensys’ announcement that the SEC had ended its Ethereum 2.0 probe.

LDO rose from around $1.85 to highs of $2.40 amid the major win for Ethereum, while RPL jumped from $26.50 to above $30.00 as the news added to a confluence of other positive catalysts to propel the altcoins higher.

What the SEC said about Lido and Rocket Pool

In today’s lawsuit, filed at the United States District Court Eastern District of New York, the SEC alleged “Consensys violated the federal securities laws” after it failed to register as a broker dealer and for offering unregistered securities.

“Specifically, Consensys has offered and sold tens of thousands of securities for two issuers: Lido and Rocket Pool,” SEC’s complaint reads.

SEC also said Lido and Rocket Pool staking operations with ETH means investors expect to earn profits, and these come with the two protocols’ managerial efforts.