The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Metamask creator, ConsensysThe commission alleges that the cryptocurrency firm violated securities laws by operating as an unregistered securities dealer.

The SEC accuses Consensys of violating securities laws with Metamask

According to court documentThe SEC alleges that Consensys acted “as unregistered broker cryptocurrencies through the MetaMask Swaps service” since October 2020. The commission also accused the crypto company of engaging in an unregistered offering and sale of securities through cryptocurrency staking programs.

The Securities and Exchange Commission (SEC) reported that as of 2020, Consensys brokered more than 36 million cryptocurrency transactions through its MetaMask Swaps, of which at least 5 million involved cryptocurrency-based securities. Metamask is known as one of the most widely used cryptocurrency wallets. In addition to storing their crypto assets on the app, users can buy and sell cryptocurrencies, exchanging one crypto asset for another.

The “Swap” service is the focal point of the SEC’s enforcement action. The SEC alleges that some of these cryptoassets are securities, and by allowing users to swap those securities, Agreement operated as an unregistered securities broker, thereby violating securities laws.

The SEC went further and listed her Polygon (MATIC)Decentraland (MANA), Chiliz (CHZ), The Sandbox (SAND) and Luna (LUNA) are cryptocurrencies available for trading on the Metamask swap platform.

In addition, the SEC accused Consensys of performing a “traditional securities market function” by offering and selling securities at Lido and Rocket PoolThe Commission argued that the staking programs offered by Lido and Rocket Poo were investment contracts and that Consensys erred by offering these securities through unregistered transactions on its “MetaMask Staking” platform.

The Origin of the Legal Battle Between the SEC and Consensys

Interestingly, the SEC’s lawsuit against Consensys comes just a few months after the crypto company filed a lawsuit against the Commission, accusing the SEC of an “unlawful power grab.” Consensys has asked the SEC for judicial relief in connection with the potential action. They have also asked the court to declare that Ethereum was not a security and that the SEC has no jurisdiction over matters relating to cryptocurrencies.

It seems that the cryptocurrency company has won this battle, considering that The SEC abandoned its investigation on Ethereum’s status as a security. However, in letters informing Consensys about Commission Decision to end its investigation into Ethereum, the SEC warned the crypto firm that it could pursue enforcement actions against it on other issues, which it has now done.

In response to the SEC lawsuit, Consensys he stated that he would “strongly pursue” the lawsuit he originally filed against the SEC. The crypto firm also noted that it fully expected the SEC to follow through on its threat to say that MetaMask must be registered as a securities broker.

Featured image from CNBC, chart from TradingView