The U.S. Securities and Exchange Commission sued Consensys and says the firm has failed to register as a broker through its MetaMask swaps service.

Consensys also violated the law through its MetaMask staking service, the SEC said in a complaint filed on Friday in the U.S. District Court in the Eastern District of New York.

Consensys 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 agency said. By its conduct as an unregistered broker, Consensys has collected over $250 million in fees, it added.

Consensys positioned itself "squarely into the securities markets," said Gurbir S. Grewal, director of the SEC’s Division of Enforcement in a statement.

“By allegedly collecting hundreds of millions of dollars in fees as an unregistered broker and engaging in the unregistered offer and sale of tens of thousands of securities, Consensys inserted itself squarely into the U.S. securities markets while depriving investors of the protections afforded by the federal securities laws,” Grewal said. “As this enforcement action shows, we continue to hold noncompliant actors in this space accountable, as we do across the securities market.”

Lido and Rocket Pool… and unregistered securities 

The SEC said Consensys sold thousands of unregistered securities through staking program providers Lido and Rocket Pool who in turn issued liquid staking tokens called stETH and rETH, in return for staked assets.

Investors supply ETH to Lido and Rocket Pool, which is then pooled and staked on the blockchain to earn returns that investors may not be able to get on their own, the agency said. 

"Upon receipt of an investor’s ETH, Lido and Rocket Pool issue the investor a new crypto asset in return—stETH or rETH, respectively—representing the investor’s pro-rata interest in the staking pool and its rewards," the SEC said. Lido and Rocket Pool are sold and offered as investment contracts, and so are securities, the agency added. 

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The SEC also said that Consensys itself "brokered transactions in crypto asset securities," naming MATIC, MANA, CHZ, SAND and LUNA as securities. Those tokens have all been named securities before in past enforcement actions. 

"From the time of their first offer or sale, each of these Crypto Asset Securities was offered and sold, and continued to be offered and sold on Conensys’s platform, as an investment contract and thus a security," the SEC said. 

Reverse card

Just last month, Consensys sued the SEC over its approach to regulating Ethereum and said at the time that the SEC "trained its sights" on the firm's MetaMask software.

In the April complaint, the firm also said it received a Wells notice, meaning a formal notice that the agency plans to bring an enforcement action against them. However, Consensys announced last week that the SEC's enforcement division notified the company that it was closing its investigation into Ethereum.

Consensys said it expected the SEC's move on Friday.

“Consensys fully expected the SEC to follow through on its threat to claim our MetaMask software interface must register as a securities broker," Consensys said in an emailed statement to The Block. "The SEC has been pursuing an anti-crypto agenda led by ad hoc enforcement action. 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 it would continue its case against the SEC. 

Updated at 6:15 p.m. UTC time on June 28 to include details throughout