In a lawsuit against ConsenSys, the parent company of MetaMask, the US Securities and Exchange Commission (SEC) claims that the business “acted as an unregistered broker of crypto asset securities through its MetaMask Swaps service.”

The SEC stated in its filing that ConsenSys has been acting as an unregistered broker and offering and selling securities in the form of crypto asset staking programs since January 2023 through its MetaMask Staking service. Over $250 million in fees have been earned by Consensys as a result of its actions as an unlicensed broker.

The court document also states: “By neglecting to register as a broker and the offer and sale of specific securities, ConsenSys violated the federal securities laws.”

ConsenSys filed a preemptive lawsuit in April 2024 after learning of the upcoming lawsuit. The business asked a federal court in Texas to rule that ConsenSys does not function as a broker or issue securities through its software products, MetaMask Swaps and Staking.

The company’s lawsuit also asked the court to stop the SEC’s inquiry, arguing that since $ETH is a commodity, the SEC is not authorized to look into or regulate it. Less than two weeks have passed since the SEC notified ConsenSys that it was concluding its inquiry into the subject, despite having given stock exchanges permission to list and trade shares of Ether ETFs.

Consensys stated, “On June 7 [2024], we sent a letter asking the SEC to confirm that the agency would close its Ethereum 2.0 investigation meant that the ETH ETF approvals in May [2024], which were predicated on Ether being a commodity.” “In response, the Enforcement Division of the SEC notified us today that it will not be pursuing an enforcement action against ConsenSys and is closing its Ethereum 2.0 investigation.”

However, the regulator has been more assertive over the MetaMask swap service. They claim that because ConsenSys is not a broker-dealer, MetaMask Swaps and Staking services are illegal under federal security legislation. A financial institution that is registered to trade securities for clients while simultaneously having the ability to trade for itself is known as a broker-dealer. According to ConsenSys, all it provides is an interface that makes it easier to access other services, such as staking protocols and decentralized exchanges (DEXs). In addition to ConsenSys, the top decentralized exchange Uniswap has received a Wells Notice from the SEC.

“The company stated on X that this is just the most recent instance of its regulatory overreach—a clear attempt to redefine accepted legal norms and broaden the SEC’s jurisdiction through litigation.” “We firmly believe that the SEC has not been given the right to control software interfaces such as MetaMask. In addition to defending this new litigation in New York, we will keep pushing our argument in Texas.