No, Metamask isn't withholding your funds for tax as it was simply a only ConsenSys policy for legal coverage, unrelated to Metamask. But the freakout from the situation is very understandable because the crypto community has been lied to over and over, f

There has been something of a minor meltdown and uproar over new information in the Concensys TOS. The statement interpreted as Metamask withholding your funds for crypto purposes. Since taxes vary by jurisdiction, this also means that Metamask would have had to collect your personal information, and fairly private of such at that. They have since come out and clarified in a Twitter statement that they do not withhold any funds for taxes.

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Some say it was an overreaction, but I actually think it was justified.

We crypto traders get bullsh*ted by exchanges and projects over and over, suffering financially from many false promises from which some of us will ever recover. Even following off one of the worst collapses in FTX, the proposed solution of proof of reserves is far from what they promised it would be.

There's the whole list of projects and platforms from FTX to Luna to Celsius to BlockFi to Voyager etc etc etc. You might say not your keys and not to trust Cefi but that's not good advice either. It's so bad we can;t even trust Defi contracts as the code always seems to have some hackable loophole.

Even one of the most trusted hardware wallet names in Ledger explicitly lied saying keys couldn't be extracted. Hardware wallets were "supposed" to be hallowed untouchable ground that would protect even the most foolhardy, but now we know even the wisest of us were fooled.

I mean hell, out of all of this we can't even get clear regulations from the government of all entities. I mean, not that we can trust the government, but most of the time they are bold and tell us to our faces that they're screwing us over but it's just a whole boatload on uncertainty instead.

Considering all of this, I can't see how you couldn't empathize with a reaction like that from the community.