Consensys Software Inc. has been charged as part of a federal investigation into the unlicensed sales of securities and offers in cryptocurrency.
The team leading the investigation was spearheaded by the Security and Exchange Commission (SEC) Crypto Assets and Cyber Unit.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said of the matter, “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.”
Consensys Software charged
Charges were filed in the Eastern District of New York against the crypto firm. They have been hunted by the Cyber Unit for registration breaches of the Securities Act of 1933 and the Securities Exchange Act of 1934.
The complaint from the government’s leading financial regulator alleges the tale goes back to January 2023. Consensys is presumed to have sold and offered tens of thousands of unregistered securities at this time.
These were conducted through a process the company called MetaMask Staking. According to the SEC report, this process acted as an unregistered broker and included a linked Consensys process called MetaMask Swaps.
Liquid assets are frowned upon by the SEC
Consensys did this on behalf of entities Lido and Rocket Pool that created liquid staking tokens (stETH and rETH), which can be exchanged in a crypto market for other securities.
Liquid staking tokens are malleable assets that can be altered or sold once staked. So, they are not locked into the existing solid securities market, and the SEC is not a huge fan of the protection that is in place for those who invest in them.
The SEC’s big complaint is that these sales and Consensys’s role were completely unregistered. The government watchdog frowns heavily upon unregulated sales in the still-developing world of crypto and the assets that the U.S. government approves of.
Director Grewal concluded, “As this enforcement action shows, we continue to hold non-compliant actors in this space accountable, as we do across the securities market.”
Image: Pixlr.
