FBI cautions against non-KYC Bitcoin and crypto money transmitting services as SEC goes after MetaMask


  • FBI has warned US market against using unregistered Bitcoin and crypto money service businesses.
  • US SEC has accused MetaMask of acting as an unlicensed Broker Dealer engaged with trading securities on behalf of clients.
  • Consensys (MetaMask) has sued the SEC first for being unlawful, calling for the regulator to stop overextending its authority.

US Federal Bureau of Investigations (FBI) has issued a caution to Bitcoiners and cryptocurrency market enthusiasts, coming on the same day as when the US Securities and Exchange Commission (SEC) is on the receiving end of a lawsuit, with a new player adding to the list of parties calling for the regulator to restrain its hand.

Also Read:  SEC hit by lawsuit brought by Blockchain Association and Crypto Freedom Alliance of Texas

FBI issues alert on crypto money services business

The US FBI has cautioned the American populace against using unregistered crypto money transmitting services unless they are registered as Money Services Businesses (MSB). Urging Americans to watch out for incompliant operators who do not adhere to anti-money laundering (AML) protocols, the FBI's Internet Crime Complaint Center (IC3) said in the Thursday statement: 

“People who use unlicensed cryptocurrency money transmitting services may encounter financial disruptions during law enforcement actions, especially if their cryptocurrency is intermingled with funds obtained through illegal means.”

The statement comes after the FBI probed crypto services, looking for those that are not licensed in line with Federal laws. Calling such services “illegal transactions,” the bureau warned Americans that using incompliant services could see them lose access to funds once law enforcement clamps down on these businesses.

FBI Alert

The statement urges customers to avoid crypto money transmitting services that do not collect know-your-customer (KYC) information from customers when required.

SEC calls out MetaMask for unlicensed broker dealership, Consensys pushes back

In the same spirit, the US SEC has accused MetaMask wallet of acting as an unlicensed broker dealer, citing violation of securities laws. A broker dealer is a financial entity that engages with trading securities on behalf of clients, but which may also trade for itself. It acts as a broker or agent when it executes orders on behalf of its clients and as a dealer or principal when it trades for its own account.

MetaMask did not immediately respond to FXStreet’s request for comment.

As if to push back, Consensys, the Ethereum startup behind MetaMask wallet defends that the SEC is overreaching its hand, trying to “seize control over the future of cryptocurrency."

An excerpt from the 34-page complaint reads:

The U.S. Securities and Exchange Commission (the “SEC” or the “Commission”) seeks to regulate ETH as a security, even though ETH bears none of the attributes of a security—and even though the SEC has previously told the world that ETH is not a security, and not within the SEC’s statutory jurisdiction.

Filing a precautionary suit against the financial regulator, Consensys revealed having received a Wells Notice over MetaMask, with the document known to precede a regulatory action. This is why Consensys is pushing back, asking a federal court to declare that ETH is not a security so that it stops the SEC from overextending its authority.

The status of Ethereum as a security or commodity remains unclear, given there has not been any straightforward response from the SEC, unlike Commodity Futures Trading Commission (CFTC), which called ETH a commodity. A security designation would be detrimental to many companies in the US, who could face the wrath of the SEC for dealing in unregistered securities.  

Ethereum co-founder and Consensys founder and CEO Joe Lubin highlighted in a press release that its pushback against the regulator “is intended to preserve access for the thousands of developers, market participants, and institutions who have a stake in” Ether.

Also Read: Ethereum looks set to resume consolidation as Consensys sues SEC over ETH security status


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

Polygon joins forces with WSPN to expand stablecoin adoption

Polygon joins forces with WSPN to expand stablecoin adoption

WSPN, a stablecoin infrastructure company based in Singapore, has teamed up with Polygon Labs to make its stablecoin, WUSD, more useful in payment and decentralized finance.

More Cryptocurrencies News
Coinbase envisages listing of more meme coins amid regulatory optimism

Coinbase envisages listing of more meme coins amid regulatory optimism

Donald Trump's expected return to the White House creates excitement in the cryptocurrency sector, especially at Coinbase, the largest US-based crypto exchange. The platform is optimistic that the new administration will focus on regulatory clarity, which could lead to more token listings, including popular meme coins.

More Crypto News
Cardano's ADA leaps to 2.5-year high of 90 cents as whale holdings exceed $12B

Cardano's ADA leaps to 2.5-year high of 90 cents as whale holdings exceed $12B

As Bitcoin (BTC) gets closer to the $100,000 mark for the first time — it crossed $99,000 earlier Friday — capital is rotating into alternative cryptocurrencies, creating a buzz in the broader crypto market.

More Bitcoin News
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.

More Shiba Inu News
Bitcoin: Rally expected to continue as BTC nears $100K

Bitcoin: Rally expected to continue as BTC nears $100K

Bitcoin (BTC) reached a new all-time high of $99,419, just inches away from the $100K milestone and has rallied over 9% so far this week. This bullish momentum was supported by the rising Bitcoin spot Exchange Traded Funds (ETF), which accounted for over $2.8 billion inflow until Thursday. BlackRock and Grayscale’s recent launch of the Bitcoin ETF options also fueled the rally this week. 

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP