Blockchain giant Consensys now blames the SEC for its painful layoffs after announcing a 20% staff reduction on Tuesday.
Pro-Ethereum company Consensys has revealed a significant round of layoffs, with founder and CEO Joe Lubin attributing the decision to what he describes as the Securities and Exchange Commission’s (SEC) “abuse of power” and aggressive actions.
In a blog post detailing the job cuts, which total 162 and represent 19.5% of its 828 employees, Lubin criticized Congress for failing to address Consensys’ legal challenges.
The SEC has filed a lawsuit against Consensys, alleging that several of its profitable business units violate U.S. law.
According to the suit filed on June 28, the SEC claims that the Swaps feature in Consensys’ MetaMask software operates as an unregistered broker executing securities transactions for investors.
Additionally, it contends that Consensys sold unregistered securities through its MetaMask Staking services.
Consensys argues that users control the MetaMask software and are not reliant on the company for these transactions.
However, the SEC asserts that the company’s suite of technologies and services makes MetaMask essential for many users, demonstrating intentional and profitable legal violations.
The main lawsuit is currently being heard in the U.S. District Court for the Eastern District of New York, with the next hearing set for November 20 to establish a timeline for evidence gathering.
Consensys has struggled to fend off SEC enforcement actions, including a failed preemptive lawsuit against the SEC after receiving a Wells Notice earlier this year.
On September 19, a federal judge dismissed Lubin’s request for a ruling that ETH transactions are not securities transactions because they involve ETH, which would have prevented the SEC from pursuing actions against companies using ETH and would have validated its Ethereum-friendly MetaMask wallet.
The judge rejected all of Lubin’s requests.
This latest round of layoffs follows a previous reduction in January 2023 when Consensys laid off 100 employees from its then 900-person workforce.
In 2018, the company also underwent significant layoffs, cutting approximately 600 jobs when it had around 1,200 employees.
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