The Securities and Exchange Commission today charged Consensys Software Inc. with engaging in the unregistered offer and sale of securities through a service called MetaMask Staking and acting as an unregistered broker through MetaMask Staking and another service called MetaMask Swaps to be.
According to the SEC’s complaint, since at least January 2023, Consensys has offered and sold tens of thousands of unregistered securities on behalf of liquid stake program providers Lido and Rocket Pool, which in return create and issue liquid stake tokens (called StETH and rETH). for pledged assets. While staked tokens are generally locked and cannot be traded or used while staked, liquid staked tokens, as the name suggests, can be bought and sold freely. Investors in these staking programs provided funds to Lido and Rocket Pool in exchange for the liquid tokens. The SEC’s complaint alleges that Consensys engages in the unregistered offer and sale of securities by participating in the distribution of the staking programs and acting as an unregistered broker with respect to these transactions.
“By allegedly collecting hundreds of millions of dollars in fees as an unregistered broker and offering and selling tens of thousands of securities unregistered, Consensys forced its way directly into the U.S. securities markets while depriving investors of the protections afforded by federal securities laws.” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “As this enforcement action demonstrates, we continue to hold non-compliant actors in this space accountable, as we do throughout the securities market.”
The SEC also alleges that since at least October 2020, Consensys brokered transactions in crypto-asset securities by, for example, soliciting investors to trade crypto-asset securities, providing pricing and other investment information about crypto-asset securities, and purporting to: To enable investors to get the “best” offer, accept and route customer orders, facilitate order execution, manage customer assets and receive transaction-based compensation.
The SEC’s complaint, filed in federal district court in the Eastern District of New York, alleges that Consensys violated the registration requirements of the Securities Act of 1933 and the Securities Exchange Act of 1934 and seeks injunctive relief and penalties.
The SEC’s investigation was conducted by Daphna Waxman, Amy Mayer and Abigail Cooper and supervised by Mark R. Sylvester, Kristin Pauley and Jorge G. Tenreiro, all members of the SEC’s Crypto Assets and Cyber Unit. The SEC’s litigation is led by Samuel Wasserman under the supervision of Jack Kaufman and Mr. Tenreiro.