The United States Securities and Exchange Commission (SEC) has filed a lawsuit against ConsenSys, the parent company of MetaMask, for allegedly operating as an unregistered broker and engaging in the unregistered offer and sale of securities through its MetaMask Swaps and Staking services The SEC seeks a permanent injunction, civil penalties and other equitable relief against ConsenSys for these alleged violations of federal securities laws.

ConsenSys has collected more than $250 million in fees by brokering crypto asset transactions and offering staking services without proper registration, thereby depriving investors of crucial protections. The SEC claims that ConsenSys has acted as an underwriter of tens of thousands of securities for issuers Lido and Rocket Pool, and has participated in the key points of their distribution.

ConsenSys sued the SEC in April after receiving a Wells notice from the agency, challenging potential attempts to classify Ether (ETH) and related staking services as securities. The company argues that the SEC "has not been granted authority" to regulate software interfaces like MetaMask.

The SEC's complaint classifies staking programs offered by Lido and Rocket Pool as investment contracts, claiming investors involved in staking programs are investing Ether in a common enterprise with a reasonable expectation of profits. Neither Lido nor Rocket Pool has filed a registration statement with the SEC.

By facilitating these staking programs through its MetaMask platform, ConsenSys has acted as an unregistered broker and underwriter, according to the SEC. Staking service providers have been sued by the agency before. In February, Kraken crypto exchange settled with the SEC for $30 million and closed its staking services for U.S clients following a suit.

Staking involves locking cryptocurrencies in a digital wallet to support a blockchain network's security and operations. Based on their staked amount, validators confirm transactions and create new blocks, earning rewards in return. The rewards provide stakers with passive income.