SEC Sued Consensys Over MetaMask Swaps and Staking

The U.S. Securities and Exchange Commission sued Consensys Software Inc. on June 28, 2024, alleging that services accessed through its MetaMask wallet violated federal securities laws.

The complaint, filed as case 1:24-cv-04578 in the Eastern District of New York, accused Consensys of operating as an unregistered broker through MetaMask Swaps and MetaMask Staking. It separately alleged that MetaMask Staking participated in unregistered offers and sales of investment contracts associated with the Lido and Rocket Pool liquid-staking programs.

Those were allegations at the opening of litigation, not judicial findings. Consensys disputed the SEC’s authority and maintained that a software interface such as MetaMask should not be regulated as a securities broker.

The SEC targeted functions beyond wallet storage

MetaMask was widely known as a self-custodial wallet, but the SEC’s complaint focused on additional functions. MetaMask Swaps collected quotations from selected liquidity providers, displayed possible trades, routed transactions and generally collected transaction-based fees. The agency argued that this combination amounted to effecting securities transactions for other people.

The complaint alleged that MetaMask Swaps had processed more than 36 million cryptoasset transactions since 2020, including at least 5 million transactions involving assets the SEC characterized as securities. It also alleged that Consensys had collected more than $250 million in fees from its unregistered brokerage conduct.

These figures came from the SEC’s pleading and were not independently audited market statistics. The complaint identified MATIC, MANA, CHZ, SAND and LUNA among the assets supporting its Swaps theory, but the filing itself did not establish a court ruling that every transaction in those assets was a securities transaction.

Liquid staking became the second front

MetaMask Staking allowed users to deposit ETH with Lido or Rocket Pool and receive stETH or rETH, respectively. Those tokens represented participation in the providers’ staking programs while remaining transferable.

The SEC alleged that the Lido and Rocket Pool arrangements were investment contracts and that Consensys distributed them through MetaMask without the registrations required by the Securities Act. According to the complaint, users had directed 100,252 ETH to Lido and 8,375 ETH to Rocket Pool through MetaMask Staking as of March 11, 2024. It associated those programs with 32,449 and 2,215 unique blockchain addresses, respectively. Addresses are not necessarily equivalent to individual people, and the figures did not establish the number of U.S. investors.

The distinction between ETH and the staking programs was important. The June 28 complaint used ETH to explain how staking worked, but its offering claims concerned the Lido and Rocket Pool programs and the resulting stETH and rETH—not a standalone allegation that ordinary possession of ETH was itself a securities transaction.

A dispute already before the courts

Consensys had filed its own lawsuit against the SEC on April 25, 2024, seeking declarations that MetaMask Swaps did not make the company a broker and that MetaMask Staking did not constitute an unregistered securities offering. The company argued that the agency was attempting to extend securities regulation to software and Ethereum infrastructure without congressional authorization.

On June 18, 2024, Consensys announced that SEC staff had closed a separate investigation into Ethereum 2.0. That development did not resolve the Swaps and Staking dispute: the June 28 filing placed those product-specific questions directly before another federal court.

What remained unresolved

The enforcement action mattered beyond one company because its theory could affect wallet developers, swap aggregators, liquid-staking interfaces and other applications that route transactions while charging fees. If accepted, the SEC’s interpretation could subject some software-mediated services to broker registration, disclosure, recordkeeping and supervisory duties.

As of June 28, however, the court had not ruled on whether Consensys was a broker, whether the cited staking programs were securities, or whether the requested injunctions and penalties were justified. The verified event was the filing of a significant enforcement case; the legal classifications and remedies remained contested.