SEC Sues Consensys Over Alleged Unregistered Brokerage Services

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9 Jul 2024

SEC v. Consensys Software Inc. Court Filing, retrieved on June 28, 2024, is part of HackerNoon’s Legal PDF Series. You can jump to any part of this filing here. This is the table of links with all parts.

Case Number: 23–939

Plaintiffs: Securities and Exchange Commission

Defendant: Consensys Software INC.

Filing Date: June 28, 2024

Location: United States District Court Eastern District of New York

Table of Content

Summary

Violations

Nature of the Proceedings and Relief Sought

Jurisdiction and Venue

Defendants and Other Relevant Entities

FACTS

I. BACKGROUND

A. Statutory and Legal Framework

B. Crypto Assets

C. Consensys and MetaMask

II. THROUGH THE METAMASK SWAPS PLATFORM, CONSENSYS PROVIDES BROKERAGE SERVICES TO U.S. INVESTORS

A. Consensys Solicits Investors And Holds Itself Out As A Place To Buy and Sell Crypto Asset Securities Through Its MetaMask Swaps Brokerage Service

B. Consensys Effects Transactions for MetaMask Swaps Investors.

III. THE CRYPTO ASSETS “SWAPPED” THROUGH THE METAMASK SWAPS PLATFORM INCLUDE ASSETS THAT ARE OFFERED AND SOLD AS SECURITIES.

A. MATIC

B. MANA

C. CHZ

D. SAND

E. LUNA

IV. CONSENSYS, THROUGH METAMASK STAKING, ENGAGED IN THE UNREGISTERED OFFER AND SALE OF LIDO’S AND ROCKET POOL’S STAKING PROGRAMS, WHICH ARE SECURITIES

A. Background: Staking

B. Liquid Staking Pool Providers: Lido and Rocket Pool

C. Consensys—through MetaMask Staking—Offers and Sells the Lido and Rocket Pool Investment Contracts.

V. CONSENSYS WAS REQUIRED TO, BUT DID NOT, REGISTER AS A BROKER WITH RESPECT TO METAMASK SWAPS

VI. CONSENSYS ALSO ACTS AS A BROKER WITH RESPECT TO THE LIDO AND ROCKET POOL INVESTMENT CONTRACTS.

FIRST CLAIM FOR RELIEF - Violation of Exchange Act Section 15(a)

SECOND CLAIM FOR RELIEF - Violations of Securities Act Sections 5(a) and 5(c)

Prayer for Relief

Jury Demand


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