The United States Securities and Exchange Commission (SEC) filed suit against Ethereum software firm Consensys on Friday, alleging that the company "acted as an unregistered broker of crypto asset securities through its MetaMask Swaps service."
"Since January 2023, Consensys has engaged in the unregistered offer and sale of securities in the form of crypto asset staking programs, and acted as an unregistered broker, through its MetaMask Staking service," the SEC wrote in its filing. "By its conduct as an unregistered broker, Consensys has collected over $250 million in fees."
The lawsuit comes at a hectic moment for the SEC and crypto regulation. Earlier on Friday, the U.S. Supreme Court’s conservative majority struck down the so-called “Chevron doctrine,” a long-standing pillar of American law that gave federal agencies like the SEC substantial room to interpret their powers and purviews themselves.
In a statement shared with Decrypt, Consensys (disclosure: one of 22 investors in an editorially independent Decrypt) appeared to allude to that decision, defiantly asserting that the SEC has no right or ability to regulate crypto products like MetaMask.
“This is just the latest example of its regulatory overreach—a transparent attempt to redefine well-established legal standards and expand the SEC’s jurisdiction via lawsuit,” Consensys said. “We are confident in our position that the SEC has not been granted authority to regulate software interfaces like MetaMask.”
In April, Consensys preemptively sued the SEC after receiving notice that the agency intended to sue over MetaMask’s staking programs. The Consensys suit also made the provocative claim that the SEC had secretly considered Ethereum to be a security for over a year, and was quietly building a broader case against the crypto asset.
Then, earlier this month, Consensys announced it had heard from the SEC that the regulator was closing its case against Ethereum. The SEC didn’t confirm or deny the news, which was widely celebrated within the crypto industry as a major capitulation that signaled changing tides in Washington with regards to crypto’s mainstreaming.
While Consensys said today’s lawsuit came as little surprise, it nonetheless signals that the SEC has refused to throw in the towel when it comes to waging war with America’s most influential crypto firms.
In the SEC’s suit, the agency called out Consensys for allowing MetaMask customers to stake ETH via Lido and Rocket Pool’s third-party staking programs. The SEC alleges that those staking programs are “offered and sold as investment contracts and, therefore, securities.”
The lawsuit did not call ETH a security, but the dance between calling staked ETH a security and ETH itself a commodity is a delicate one. Since the 2022 Ethereum merge, the Ethereum blockchain has depended on staking to function—a fact that would have been central to the SEC’s apparently now-shuttered case against Ethereum.
Last month, perhaps painting itself into a corner, the SEC abruptly approved the trade of spot Ethereum ETFs, effectively declaring ETH to not be a security in the agency’s eyes.
Editor's note: This story was updated after publication with additional details.