The United States Securities and Exchange Commission (SEC) has launched a high-profile lawsuit against Consensys, the company behind the popular crypto wallet MetaMask. The complaint, filed on June 28, accuses Consensys of operating as an unregistered broker and offering unregistered securities through MetaMask Swaps since 2020.

According to the SEC, Consensys has amassed over $250 million in fees by brokering crypto asset transactions and offering staking services without proper registration. This, the SEC argues, has deprived investors of crucial protections. The regulatory body is seeking a permanent injunction, civil penalties, and other equitable relief against Consensys for these alleged violations.

The SEC’s complaint highlights that since January 2023, Consensys has been involved in unregistered offerings of securities via its MetaMask Staking service. The complaint states, “By acting as an unregistered broker, Consensys has collected over $250 million in fees.”

The SEC also claims that by facilitating investments in staking programs from Lido and Rocket Pool, Consensys has acted as an intermediary in unregistered transactions, denying investors essential protections. “Consensys has offered and sold tens of thousands of securities for two issuers: Lido and Rocket Pool,” reads the filing.

This legal action follows a prior lawsuit by Consensys against the SEC in April after the company received a Wells notice from the agency. Consensys challenged the SEC’s attempts to classify Ether and related staking services as securities. The company criticized the SEC’s approach as regulatory overreach, stating, “The SEC has been pursuing an anti-crypto agenda led by ad hoc enforcement actions.”

The SEC’s complaint categorizes staking programs offered by Lido and Rocket Pool as investment contracts, implying that investors are entering a common enterprise with a reasonable expectation of profits. Neither Lido nor Rocket Pool has registered with the SEC.

This is not the SEC’s first clash with staking service providers. In February, the crypto exchange Kraken settled with the SEC for $30 million and ceased its staking services for U.S. clients. Coinbase is also in the SEC’s crosshairs, disputing the agency’s claims regarding staking as a security.

Staking, a process where cryptocurrencies are locked in a digital wallet to support blockchain network operations, provides stakers with passive income through rewards. The SEC's actions signify a stringent regulatory stance on staking services, potentially reshaping the crypto landscape.

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