SEC v. CONSENSYS SOFTWARE INC., No. 1:24-cv-04578, Eastern District of New York (July 1, 2024) — Complaint

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE
COMMISSION,

                                             Plaintiff,

                        -against-

CONSENSYS SOFTWARE INC.

                                             Defendant.

COMPLAINT

24 Civ. 4578 (       )

JURY TRIAL DEMANDED

Plaintiff Securities and Exchange Commission (“Commission” or “SEC”), for its Complaint
against Defendant Consensys Software Inc. (“Consensys”), alleges as follows:
SUMMARY
1. Since 2016, Consensys has developed and operated a suite of crypto asset-related
services under the brand “MetaMask.”  Consensys markets itself as a leader and innovator in the
crypto asset industry, but certain products that Consensys offers its customers perform age-old
functions:  (1) brokering securities transactions for retail investors and (2) engaging in the offer and
sale of securities.
2. Consensys violated the federal securities laws by failing to register as a broker and
failing to register the offer and sale of certain securities, thereby depriving investors of crucial
protections that those laws afford.  Since October 2020, Consensys has acted as an unregistered
broker of crypto asset securities through its MetaMask Swaps service.  Since January 2023,
Consensys has engaged in the unregistered offer and sale of securities in the form of crypto asset
staking programs, and acted as an unregistered broker, through its MetaMask Staking service.  By its
conduct as an unregistered broker, Consensys has collected over $250 million in fees.

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3. MetaMask Swaps is a digital platform that brokers transactions in crypto asset
securities on behalf of MetaMask Swaps users—including retail investors in crypto asset securities.
As its name suggests, through “MetaMask Swaps,” Consensys effects the exchange of one crypto
asset for another on the investor’s behalf.  Consensys solicits potential investors in crypto asset
securities, holds itself out as a place to buy and sell crypto assets (which include crypto asset
securities), recommends trades with—as Consensys itself puts it—the “best” value, accepts investor
orders, routes investor orders, handles customers assets, c arries out trading parameters and
instructions on the customer’s behalf, and receives transaction-based compensation.
4. MetaMask Swaps functions as follows.  An investor enters the name and amount of
the crypto asset that they wish to sell, as well as the name of the crypto asset that they wish to buy in
return.  MetaMask Swaps then pulls available rates for the requested exchange from a Consensys-
curated group of execution venues and other third-party liquidity providers (referred to herein as
“third-party liquidity providers”) and displays those rates to the investor, highlighting the option that
Consensys deems “best.”  With one additional click by the investor, MetaMask Swaps performs the
functions necessary to effect the trade, on the investor’s behalf, with the third-party liquidity
provider.  As described in further detail below, Consensys’s software routes the investor’s order by
transferring their asset and trading instructions through Consensys’s own smart contracts on the
blockchain, which interface with third-party liquidity providers on the investor’s behalf.  As is
typically the case in traditional securities markets, the investor here never interacts directly with the
third party; all investor interactions are directly with Consensys’s platform.  And Consensys collects
a fee on most transactions.
5. Since 2020, through MetaMask Swaps, Consensys has brokered over 36 million
crypto asset transactions—including at least 5  million transactions in crypto asset securities—

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between investors, on one hand, and third-party liquidity providers (such as purportedly
“decentralized” crypto asset trading platforms and market makers) on the other.
6. In addition to operating as an unregistered broker with respect to MetaMask Swaps,
Consensys performs another traditional function of the securities market: offering and selling
securities.  Specifically, Consensys has offered and sold tens of thousands of securities for two
issuers:  Lido and Rocket Pool.  By this conduct, Consensys acts as an underwriter of those
securities and participates in the key points of their distribution.
7. Lido and Rocket Pool each offer what are commonly referred to as “liquid staking”
programs.  “Staking,” in the context of a blockchain network, refers to the commitment of the
native crypto asset of the blockchain ( in the case of the Ethereum blockchain, for example, ether or
“ETH”) in order to act as a “validator” of transactions recorded on that network.  Blockchain
validators perform certain functions to earn rewards in the form of additional tokens and, when
selected, proposing new blocks to the blockchain.  Lido and Rocket Pool offer an investment
program known as a “staking program,” centered around this feature of the Ethereum blockchain.
In essence, Lido and Rocket Pool each pool ETH contributed by investors and stakes it  on the
blockchain, using their technological expertise to earn returns that the typical investor would not be
able to earn on their own.  Upon receipt of an investor’s ETH, Lido and Rocket Pool issue the
investor a new crypto asset in return—stETH or rETH, respectively—representing the investor’s
pro-rata interest in the staking pool and its rewards.  Lido and Rocket Pool refer to their staking
programs as “liquid” because investors’ interests in the programs—represented by the stETH and
rETH tokens—are tradable on the secondary market, thereby providing investors a mechanism to
exit their investment position, whereas tokens staked directly on the blockchain cannot be easily
accessed while they are staked.

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8. The Lido and Rocket Pool staking programs are each offered and sold as investment
contracts and, therefore, securities.  Specifically, as described in more detail below, investors make
an investment of ETH in a common enterprise with a reasonable expectation of profits from the
managerial efforts of Lido and Rocket Pool, respectively.  Yet, neither Lido nor Rocket Pool has
filed a registration statement with the Commission for the offer and sale of these investment
contracts.
9. Consensys, for its part, brokers and also offers and sells these securities in
unregistered transactions through its “MetaMask Staking” platform.  By soliciting investors to
participate in the Lido and Rocket Pool staking programs and by acting as an intermediary between
Lido and Rocket Pool, on one hand, and investors in their respective staking programs on the other,
Consensys was an integral part of the distribution of these securities.  Indeed, Consensys developed
and deployed MetaMask Staking for the specific purpose of offering and selling the Lido and Rocket
Pool staking program investment contracts.  Consensys solicits investments in the Lido and Rocket
Pool staking programs through “MetaMask Staking.”  When an investor makes a request to invest
with Lido or Rocket Pool via MetaMask Staking, Consensys transfers the ETH to Lido or Rocket
Pool on the investor’s behalf and transfers newly issued stETH or rETH from Lido or Rocket Pool
to the investor’s MetaMask Wallet ( a Consensys-developed software application for storing
investors’ crypto assets, as explained below).  MetaMask Staking investors never interact directly
with Lido or Rocket Pool; all investor interactions are directly with Consensys’s platform.
10. Despite performing brokerage functions, Consensys has not registered as a broker
with the Commission, in violation of the federal securities laws.  As further explained below, those
provisions mandate transparency, including the disclosure of conflicts of interest, so that investors
receive information necessary to make informed investment decisions.  Registration also requires

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broker-dealers to comply with applicable financial responsibility requirements that protect customers
and other market participants.
11. Consensys’s unregistered offer and sale of the Lido and Rocket Pool securities, as to
which it also acts as an unregistered broker, violates the federal securities laws.  It deprives investors
of the protections afforded to them by the federal securities laws.  Indeed, registration statements
provide investors with material information about the securities offering and the issuer’s business
and financial condition, so that investors can make informed investment decisions.
12. With MetaMask Swaps and MetaMask Staking, Consensys has inserted itself into the
U.S. securities markets, yet failed to act in accordance with the provisions of the federal securities
laws to which it is subject and that exist to protect investors.
VIOLATIONS
13. By engaging in the conduct set forth in this Complaint, including the operation of its
MetaMask Swaps and MetaMask Staking platforms, Consensys has acted as a broker, without
registering as such, in violation of Section 15(a) of the Securities Exchange Act of 1934 (“Exchange
Act”) [15 U.S.C. § 78o].
14. In addition, through the MetaMask Staking program, Consensys has engaged in
unregistered offers and sales of securities in violation of Sections 5(a) and (c) of the Securities Act of
1933 (“Securities Act”) [15 U.S.C. §§ 77e(a) and 77e(c)].
15. Unless Defendant is  restrained and enjoined, it  will engage in the acts, practices,
transactions, and courses of business set forth in this Complaint or in acts, practices, transactions,
and courses of business of similar type and object.

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NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
16. The Commission brings this action pursuant to the authority conferred upon it by
Securities Act Sections 20(b) and 20(d) [15 U.S.C. §§ 77t(b) and 77t(d)], and Exchange Act Section
21(d) [15 U.S.C. § 78u(d)].
17. The Commission seeks a final judgment: (a) permanently enjoining Defendant from
violating the federal securities laws this Complaint alleges it has violated; (b) ordering Defendant to
pay civil money penalties pursuant to Securities Act Section 20(d) [15 U.S.C. § 77t(d)] and Exchange
Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)]; and (c) ordering any other and further relief, including
equitable relief and other relief pursuant to Exchange Act Section 21(d) [15 U.S.C. § 78u(d)], the
Court may deem just and proper.
JURISDICTION AND VENUE
18. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331, Sections
20(b), 20(d), and 22 of  the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v], and Sections 21(d),
21(e), and 27 of  the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].
19. Defendant, directly and indirectly, has made use of the means or instrumentalities of
interstate commerce or of the mails in connection with the transactions, acts, practices, and courses
of business alleged herein.
20. Venue lies in this District under Securities Act Section 22(a) [15 U.S.C. § 77v(a)] and
Exchange Act Section 27 [15 U.S.C. § 78aa].  Defendants may be found in, are inhabitants of, or
transact business in the Eastern District of  New York, and certain of  the acts, practices,
transactions, and courses of  business alleged in this Complaint occurred within this District.  Prior
to February 2024, Consensys was based in Brooklyn, New York, and still maintains offices in
Brooklyn.

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DEFENDANTS
21. Consensys was founded in 2014.  In June 2020, Consensys was incorporated in
Delaware.
OTHER RELEVANT ENTITIES
22. Lido Finance (“Lido”) is a Cayman Islands company.  Lido operates a program for
staking on the Ethereum blockchain.  Lido launched its staking program in December 2020.
23. Rocket Pool is headquartered in Australia.  Rocket Pool also operates a program for
staking on the Ethereum blockchain.  Rocket Pool launched its staking program in October 2021.
FACTS
I. BACKGROUND
A. Statutory and Legal Framework
24. The Securities Act and the Exchange Act “form the backbone of American securities
laws.”  Slack Tech., LLC v. Pirani, 598 U.S. 759, 762 (2023).  These acts define “security” broadly, to
include a wide range of assets, including “investment contracts.”  [15 U.S.C. §§ 77b(a), 78c(a)(10)].
25. Investment contracts are instruments through which a person invests money in a
common enterprise and reasonably expects profits derived from the entrepreneurial or managerial
efforts of others.
26. Congress defined “security” broadly to embody a “flexible rather than a static
principle, one that is capable of adaptation to meet the countless and variable schemes devised by
those who seek the use of the money of others on the promise of profits.”  SEC v. W.J. Howey Co.,
328 U.S. 293, 299 (1946).

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i. Registration of Securities Offerings
27. Congress enacted the Securities Act in part to regulate the offer and sale of securities.
28. Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)] require
registration of offers and sales of securities with the SEC.
29. Registration is intended to assure that the persons offering or selling the securities
give the investing public required information about the issuer, the securities, and the transaction.
With that information, investors can then make more informed investment decisions.
ii. Registration of Brokers
30. Section 3(a)(4) of the Exchange Act [15 U.S.C. § 78c(a)(4)] defines “broker”
generally as “any person engaged in the business of effecting transactions in securities for the
account of others.”
31. Section 15(a) of the Exchange Act [15 U.S.C. § 78c(a)(4)] generally requires brokers
to register with the SEC, and a broker must also become a member of one or more “self-regulatory
organizations” (“SROs”), which, in turn, require members to adhere to rules governing the SRO’s
members’ activities.
32. The regulatory regime applicable to brokers is a cornerstone of the federal securities
laws and provides important safeguards to investors and market participants.  Registered brokers are
subject to comprehensive regulation and rules that include recordkeeping and reporting obligations,
SEC and SRO examinations, and general and specific requirements aimed at addressing certain
conflicts of interest, among other things.  All of these rules and regulations are critical to the
soundness of the national securities markets and to protecting investors in the public markets who
interact with brokers and invest in securities.

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B. Crypto Assets
33. As used herein, the terms “crypto asset” or “token” generally refers to an asset
issued and/or transferred using blockchain or distributed ledger technology, including assets
referred to colloquially as “cryptocurrencies,” “virtual currencies,” and digital “coins.”
34. A blockchain or distributed ledger is a database spread across a network of
computers that records transactions in theoretically unchangeable, digitally recorded data packages,
referred to as “blocks.”  These systems typically rely on cryptographic techniques to secure the
recording of transactions.
35. Crypto asset owners typically store the cryptographic key information that gives
them control over their crypto assets on a piece of hardware or software called a “crypto asset
wallet.”  Crypto asset wallets, among other functions, provide a user-friendly way to store and
manage the “public keys” and the “private keys” associated with an investor’s   crypto assets.  The
public key is used to derive the user’s blockchain “address,” and it can be freely shared with others.
The private key is roughly analogous to a password; its use confers the ability to transfer a crypto
asset and transact using the user’s public blockchain address.  Whoever controls the private key
controls the crypto asset(s)    associated with that key.
C. Consensys and MetaMask
36. Under its “MetaMask” brand, Consensys provides investors with a variety of services
related to crypto assets.
37. MetaMask Wallet, which Consensys has offered since July 2016, is the foundational
application for its MetaMask suite of products.
38. MetaMask Wallet is a Consensys-developed and Consensys-maintained software
program, downloaded to an investor’s device (in the form of a mobile app or a browser extension),
that stores the public and private keys to a user’s crypto assets.

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39. The blockchain address ( i.e ., a derivation of the public key) stored in the investor’s
MetaMask Wallet is, in essence, the investor’s MetaMask “account.”
40. Indeed, for each blockchain that a new investor selects to interact with, MetaMask
Wallet generates a public and private key pair and derives a blockchain address from the public key.
MetaMask Wallet refers to these blockchain addresses as the investor’s “Accounts.”  By default,
MetaMask Wallet creates an Account labeled “Account 1” for each blockchain selected by the
investor.
41. If an investor already owns a crypto asset—and stores the keys to that asset outside
MetaMask Wallet—the investor can import the public and private keys associated with that asset to
a MetaMask Wallet using its “import” account function.
42. An investor’s MetaMask Wallet blockchain address is also the address where crypto
assets purchased and sold through other MetaMask services—such as MetaMask Swaps and
MetaMask Staking—are received and sent.
43. An investor can view a list of crypto assets held in the investor’s MetaMask accounts,
the investor’s total holdings in each asset, and the aggregate value of the investor’s assets, through a
feature Consensys calls MetaMask Portfolio Dashboard.  According to an article by Consensys on
July 17, 2023, MetaMask Portfolio Dashboard acts as a “home base” for tracking, buying, selling,
and staking crypto assets.
II. THROUGH THE METAMASK SWAPS PLATFORM, CONSENSYS PROVIDES
BROKERAGE SERVICES TO U.S. INVESTORS.
44. Consensys has never registered with the Commission as a broker with respect to its
brokerage activities on MetaMask Swaps (or on MetaMask Staking, see infra § VI), and no exemption
or exception from registration applies.  Nonetheless, from at least October 2020 to the present,
Consensys has acted as a broker of crypto asset securities that it makes available through its
MetaMask Swaps platform.

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45. MetaMask Swaps is a Consensys-developed and Consensys-maintained software tool
that brokers trades in crypto assets on behalf of investors who use MetaMask.  As described below,
Consensys solicits potential investors in crypto asset securities, holds itself out as a place to buy and
sell crypto asset securities, provides pricing and other information relevant to the purchase and sale
of crypto asset securities, advises investors by highlighting trades with the “best” value, accepts
investor orders, routes investor orders—including by handling customers assets and carrying out
trading parameters and instructions on the customer’s behalf, thereby facilitating execution—and
receives transaction-based compensation.
46. While Consensys has branded the transaction a “swap,” it is simply a trade, or
exchange, of one crypto asset for another—a crypto asset that the investor wants to sell (“Crypto
Asset A”); and a crypto asset that the investor wants to buy (“Crypto Asset B”).
47. Specifically, if an investor holds Crypto Asset A in their MetaMask Wallet and wishes
to trade it for Crypto Asset B, MetaMask Swaps will (1) find and display to the investor the “best”
exchange rate; (2) route the investor’s order and transfer Crypto Asset A through Consensys’s smart
contracts; (3) interface with a third-party liquidity provider that executes the investor’s order, thereby
selling Crypto Asset A and acquiring Crypto Asset B on behalf of the investor; (4) divert a fee into a
Consensys-controlled smart contract address; and (5) transfer Crypto Asset B into the investor’s
MetaMask Wallet.
A. Consensys Solicits Investors And Holds Itself Out As A Place To Buy and Sell
Crypto Asset Securities Through Its MetaMask Swaps Brokerage Service.
48. On October 6, 2020, Consensys released MetaMask Swaps to the public.
49. Since then, Consensys has advertised and promoted MetaMask Swaps on its
MetaMask website, metamask.io, and social media such as X (formerly, Twitter) as a way for
investors to participate in the markets for crypto assets, including crypto asset securities.

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50. In its October 6, 2020, launch announcement, Consensys claimed that MetaMask
Swaps “offers [investors] the best trading experience in Defi” (referring to so-called “decentralized
finance”).
51. More specifically, Consensys stated that the MetaMask Swaps platform offered
investors the “best prices” and “deepest liquidity.”
52. The announcement concluded:  “MetaMask enables more trades more efficiently by
providing an optimized path for every trade.”
53. Consensys conveyed similar promotional messages on its website, at least as of
December 2023.
54. Its website stated, “Find the best price every time.  Swaps ensures that you always
have access to the largest selection of tokens and the most competitive prices.”
55. Its website continued to explain that, as part of its efforts to “locate the best trade,”
Consensys “sources the best prices and determines which liquidity source is the most gas efficient.”
(“Gas” is the fee that investors pay to record a transaction on the Ethereum blockchain.  Gas fees
are demand-based and increase as more users seek to use the platform.  The higher the gas price
paid for the transaction, the faster the transaction is likely to be mined.  Gas is not refundable even
if a transaction fails.)
56. In a January 2022 blog post, Consensys touted MetaMask Swaps as “The Optimized
DeFi Trading Experience” and argued that its methodology increased the likelihood of best
execution.
57. Consensys also maintains a social media accounts on X called “@MetaMask” and
“@MetaMaskSupport” through which it has promoted MetaMask Swaps, apprised investors of new
platform developments, and provided customer support.

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58. For example, on December 21, 2022, Consensys posted on X, “We’ve expanded the
Swaps experience,” including a link to a MetaMask news release on its website, which touted the
expansion of the MetaMask Swaps platform capabilities to additional networks.
59. In another December 21, 2022, post on X, Consensys targeted potential investors
who may have been unfamiliar with MetaMask Swaps.  It stated, “Wait – what even is a Swap?!  We
got you.  Learn all about MetaMask Swaps here.”  The accompanying image stated that MetaMask is
“[t]he best way to swap your digital tokens” and “Effortless Crypto Swapping and Token Exchange
on MetaMask.”
60. Consensys posted another “news” release promoting MetaMask Swaps on its website
on July 17, 2023.  In a section titled “Unrivaled convenience,” Consensys stated, “Swaps is
undeniably convenient.  You never have to leave MetaMask to execute your transaction through our
vetted group of providers.”  The release continued, “Swaps ensures you receive . . . the maximum
value for your transaction.”
61. On its MetaMask website and Consensys’s YouTube channel, Consensys has also
published a video about its MetaMask Swaps service in which it casts MetaMask Swaps as, in
essence, a broker of crypto assets for investors:  “Introducing MetaMask Swaps . . . The easiest way
to trade Ethereum tokens right from inside your MetaMask Wallet.”  This video has been publicly
available since March 2021.
62. The video touts the user-friendly nature of the MetaMask Swaps platform and
explains that “what makes the [MetaMask Swaps platform] so useful is what it’s doing behind the
scenes.”
63. The video narration states (referring to what in the crypto asset markets are called
“decentralized exchanges” or “DEXs”) that MetaMask Swaps “compares various DEXs,

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aggregators, and market makers to find you the best price, with the lowest network fees, and the
least slippage.”
64. The video also notes that MetaMask Swaps can split the investor’s trade up “among
several providers to give [the investor] access to greater combined liquidity.”
65. The video concludes that MetaMask Swaps does “all that, without you having to,
well, think about it, really.”
B. Consensys Effects Transactions for MetaMask Swaps Investors.
66. Indeed, Consensys acts as a quintessential broker because it developed, deploys, and
maintains MetaMask Swaps to, among other things, (1) interface with an investor to receive the
investor’s trade request (i.e ., the investor’s order); (2) seek out prices in the market; (3) identify the
“best” one; (4) transfer the investor’s asset out of the investor’s possession; (5) effectuate the trade
on the investor’s behalf; and (6) obtain transaction-based compensation for itself.
67. From the investor’s perspective, the process is simple—requiring no more than a
few clicks or taps on the screen.
68. To use the MetaMask Swaps platform, the investor needs no technical or blockchain
expertise.
69. “Behind the scenes,” however, Consensys’s software engages in a series of
technological tasks to intermediate the purchase and sale of crypto assets on behalf of investors who
use MetaMask Swaps.
70. The MetaMask Swaps User Guide (the “User Guide”) emphasizes the ease and
simplicity of the investor experience as compared to the breadth of technological work Consensys
has programmed its software to perform to broker the transactions for the benefit of the investors.
71. In the “Preparing your Swap” section of the User Guide, Consensys explains:
“There’s a lot going on behind the scenes while you’re watching Swaps search” for the best price.

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“This process is the secret ingredient in making MetaMask Swaps the cheapest and best swapping
service out there.”
72. This User Guide section continues:  “Swaps is searching across decentralized token
exchanges and token swapping protocols to find you the most advantageous exchange rate.  At the
same time, it’s running test transactions, checking to make sure that if you do end up submitting a
transaction, that it’s likely to go through—and if not, those options are filtered out.  MetaMask is
saving users here from the pain of a failed transaction [including gas fees]. . . . Swaps failure rate is
very low, and improvements are in the works to make it almost nonexistent.”
73. The User Guide further explains that “Slippage,” explained below, “is yet another
parameter that Swaps is using in your favor.”
74. It says that the MetaMask software does the “DeFi number-crunching” for the
investor.
75. The “Executing your Swap” section of the User Guide further states:  “There’s a lot
going on here [on the quote screen] but don’t be alarmed. . . . [MetaMask] Swaps is continuing to do
all the work we mentioned previously on an ongoing basis, ensuring that you’re getting the most up-
to -date price and availability.”
76. The User Guide also notes that, by interfacing with third-party platforms on your
behalf, MetaMask Swaps “lessen[s] your exposure to potentially hackable or malicious smart
contracts.”
i. Consensys’s MetaMask Swaps Provides Pricing Information, Advises on the “Best”
Trade, and Accepts Orders.
77. Consensys designed MetaMask Swaps to provide investors with an intuitive and
easy-to -use way to trade crypto assets, including crypto asset securities.
78. To request a trade through MetaMask Swaps, the investor begins by clicking a button
labelled “S  wap” inside the MetaMask Wallet application.

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79. Next, MetaMask Wallet presents investors with a screen on which they can select
(from two drop-down menus) the asset they want to sell (i.e., one they currently hold in their wallet
address, or “account,” for the relevant blockchain) and the asset they want to buy.
80. As the below screenshot shows, investors also select the quantity of the currently
held asset (Crypto Asset A) that they want to spend to acquire the new asset (Crypto Asset B).

81. Under “advanced options,” the investor can adjust the “slippage tolerance.”
82. In the words of Consensys’s MetaMask Swaps User Guide:  “Slippage is the amount
of change between the price you click on and the final transaction price that MetaMask Swaps will
tolerate. . . .  [MetaMask] Swaps allows a little bit of a difference between the price you agree on and
the final price, to ensure your transaction goes through—but not too much, in order to protect you
from sudden spikes or drops.”  (  Setting a slippage tolerance effectively creates a “limit order,” which
is an extremely common type of order offered by traditional brokers.)

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83. The investor then clicks a button labelled “Get quotes,” at which point they are
taken to another screen, on which MetaMask Swaps recommends the “best quote” or “best overall
value” for the requested exchange.
84. In the browser extension version of the software, MetaMask Swaps allows the
investor to view a list of other options, with the recommended option at the top.
85. For example, by clicking the “Best of 5 quotes” link on the left, MetaMask Swaps
will display to the investor the screen on the right.

86. In the browser extension, an investor is able to select an option other than the one
Consensys deems the “best.”
87. The mobile application, however, only permits the user to select the quote
Consensys identifies as the “best.”

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88. Consensys has designed its MetaMask software to display to the investors the “best”
quote according to parameters Consensys has determined the software will use to calculate such a
quote—such as likelihood of success (as described above) and transaction fees.
89. Below are additional visualizations of the MetaMask Swaps investor interface, taken
from the MetaMask Swaps website and the Consensys video demonstration of MetaMask Swaps,
respectively:

90. The investor can then click “Swap,” which causes MetaMask Swaps to attempt to
effect the requested transaction on the investor’s behalf.
91. If Consensys’s MetaMask software successfully effects the transaction, the investor
sees a screen that says, “Transaction complete.”

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92. To place an order through MetaMask Swaps, the investor does not need to know or
enter their private key (the cryptographic “passcode” that is necessary to transfer Crypto Asset A out
of their wallet).
93. The investor does not even need to know or enter the entire public blockchain
address for the asset they seek to sell.  Indeed, Consensys does not present this information to the
investor by default.
94. When placing orders through MetaMask Swaps, the investor never interfaces directly
with any of the third-party liquidity providers.
ii. Consensys Exercises Discretion In Providing Pricing Information and A Recommendation
To The Investor.
95. Indeed, Consensys does “do all the work” by employing its own market knowledge
and exercising its own discretion when displaying pricing information and providing investment
advice to the investor.  This type of market knowledge and discretion is employed by traditional

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brokers in their business of effecting transactions in securities for the account of others, including
through software programs they may develop.
96. When the investor clicks the “Get quotes” button described above, Consensys has
programmed its software to send a query to a Consensys “Token API” s erver, which pulls and
aggregates pricing (i.e., exchange rate) information from certain third-party liquidity providers.
97. More specifically, Consensys has chosen approximately 14 different external markets
and market makers (the “third-party liquidity providers”) to make available crypto assets for buying
and selling by investors, some of whom it has contracted with to integrate with the MetaMask Swaps
product.
98. Consensys has configured its software to interface directly with each of these third-
party liquidity providers.
99. These third-party liquidity providers include crypto asset trading platforms and other
private market makers.
100. Consensys’s Token API Server pulls pricing information from these third-party
liquidity providers and displays it to the investor on the quote screen (subject to the conditions
described herein).
101. Consensys’s software does not query all third-party liquidity providers; it only pulls
pricing information from the approximately 14 providers that Consensys configured it to interface
with, at least some of whom have contracted with Consensys and with whom Consensys may share
a portion of the fees it charges investors.
102. Therefore, the quotes displayed to investors on MetaMask Swaps are those sourced
from third parties at Consensys’s discretion—specifically, this is how Consensys has programmed
the MetaMask software to function.  In other words, Consensys is using its own market knowledge

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just like brokers in the traditional securities markets do, to suggest to investors what Consensys
considers the best execution venues for their customers.
103. The crypto asset pairs available for “swapping”—i.e., trading—through MetaMask
Swaps generally include whatever crypto asset pairs are available to trade via the third-party liquidity
providers with whom Consensys has configured its software to interface, so long as those crypto
assets are compatible with the blockchains known as Ethereum, Polygon, and BNB Smart Chain, as
well as certain other specified blockchains.
104. Consensys, however, exercises further discretion over which crypto assets it makes
available to investors.
105. Pursuant to a “Token Restriction Policy” adopted first in August 2021 and later
amended throughout 2022, Consensys does not permit investors to trade in crypto assets that are
“restricted assets,” as determined by Consensys.  In accordance with the token restriction policy,
restricted assets include tokens that Consensys has determined: (1) appear to resemble other tokens
and have a likelihood of creating investor confusion; (2) extract hidden fees; or (3) tokens that
Consensys legal counsel have a very strong reason to believe might constitute regulated assets, such
as securities or commodity derivatives, under U.S. law.
106. So long as a token is not deemed “restricted” by Consensys, Consensys collects
prices for the requested trade, runs test transactions, estimates gas fees, and, based on this
information, and advises the investor of the “best.”
ii i. Consensys Effects Transactions on the Investor’s Behalf—Routing Investor Orders,
Handling Investor Assets, and Taking A Fee.
107. If the investor selects the “best price”—or any other price—displayed on the screen
and clicks “Swap,” that signals Consensys’s software to proceed with submitting a blockchain
transaction to a Consensys owned and operated node, routing the investor’s trade request (i.e., the
investor’s order) and transferring the investor’s crypto asset to the third-party liquidity provider.

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During this process, Consensys-developed and Consensys-deployed smart contracts handle the
investor’s assets and carry out instructions in accordance with the investor’s order.
108. Specifically, to route the investor’s order and exchange Crypto Asset A for Crypto
Asset B on the investor’s behalf, Consensys has programmed its software—including its MetaMask
Wallet software and other software (e.g., smart contracts) that it has deployed on Ethereum and
other blockchains, interacting with each other and with other third-party software interfaces—to
take the following steps:
109. First, the Consensys software reads the investor’s private key from the MetaMask
Wallet.  This is the digital password that cryptographically unlocks Crypto Asset A so that it can be
transferred out of the investor’s MetaMask Wallet.
110. Second, the Consensys software submits a blockchain transaction to a Consensys-
operated and controlled remote procedure call or “RPC” node.  The RPC node stores the
blockchain transaction in a mempool (a collection of proposed transactions that are in a queue) until
it is included in a block and executed, as per the steps below.  More specifically, the Consensys
software creates, signs (using the investor’s private key), and submits this blockchain transaction to
Consensys’s RPC node, which when executed will transfer the specified amount of Crypto Asset A
from the investor’s wallet address to a Consensys-developed smart contract called “Spender.sol.”
111. This Spender.sol smart contract has its own, separate public address on the
Ethereum blockchain.
112. Accordingly, the Consensys software transfers Crypto Asset A to Consensys’s
Spender.sol smart contract’s blockchain address.
113. The investor has no control over Consensys’s Spender.sol smart contract blockchain
address.

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114. Indeed, the investor does not have any control over Crypto Asset A once Consensys
software transfers it out of the investor’s MetaMask Wallet.
115. Consensys’s Spender.sol smart contract address temporarily holds the investor’s
Crypto Asset A.
116. Third, Consensys’s Spender.sol smart contract will interact with a number of
Consensys-developed “Adapter” smart contracts.
117. Because each third-party liquidity provider is different, Consensys has built unique
“Adapter” contracts to allow its Spender.sol smart contract to interact with each of the
approximately 14 unique third-party liquidity providers.
118. Accordingly, for example, if the quote selected by the investor was offered on
Liquidity Provider A , the Spender.sol smart contract would rely on Consensys’s Liquidity Provider A
Adapter smart contract to interact with Liquidity Provider A or its liquidity pool (which refers to, in
essence, a blockchain address into which crypto assets are deposited for buying and selling).
119. Fourth, the corresponding Adapter smart contract facilitates the exchange with the
third-party liquidity provider.
120. Specifically, through the Adapter smart contract, the third-party liquidity provider
will take Crypto Asset A from the Spender.sol smart contract address and place Crypto Asset B into
the Spender.sol smart contract address.
121. From the per  spective of the third-party liquidity provider, Consensys’s “Spender.sol”
smart contract is the counterparty to the trade.
122. The third-party liquidity provider never interacts directly with the MetaMask Swaps
investor or their wallet address.
123. Fifth, the Consensys software transfers a fee—0.875% in most circumstances—from
its   Spender.sol contract to a “fees” smart contract blockchain address controlled by Consensys.

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124. Sixth, the software transfers the remainder of Crypto Asset B from Consensys’s
Spender.sol contract to the investor’s wallet address.
125. When using the MetaMask Swaps platform to request a trade, the investor does
not—indeed, cannot—interface directly with the third-party liquidity provider; rather, Consensys
effects the trade through software that it has programmed, including (a) MetaMask Wallet,
(b) blockchain-  based smart contracts, and (c) “Adapter” smart contracts that interface with third-
party software applications.
126. As explained by the MetaMask Swaps User Guide:  “[MetaMask] Swaps enables you
to trade tokens on any Ethereum-compatible network . . .
without having to interface directly
with third-party platforms.”  (Emphasis added.)
127. Consensys acts as a broker and, through software it has written, performs each step
necessary to intermediate the transaction between the investor and the third-party liquidity provider.
128. Consensys, through the MetaMask Swaps platform, has effected over 36 million
crypto asset transactions on behalf of investors and collected fees worth over $250 million.
III. THE CRYPTO ASSETS “SWAPPED” THROUGH THE METAMASK SWAPS
PLATFORM INCLUDE ASSETS THAT ARE OFFERED AND SOLD AS
SECURITIES.

129. Since approximately October 2020, Consensys—through the MetaMask Swaps
platform—has effected transactions in various crypto assets that are being offered and sold as
investment contracts, and thus securities, for the accounts of investors.  This includes, but is not
limited to, the units of each of the crypto asset securities described below—with trading symbols
MATIC, MANA, CHZ, SAND, and LUNA—(the “Crypto Asset Securities”).
130. The crypto assets on the MetaMask Swaps platform, including but not limited to
each of the Crypto Asset Securities to the extent Consensys continues to make them available today,
can be bought, sold, or traded for consideration, including other crypto assets.

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131. Each unit of a particular crypto asset on the MetaMask Swaps platform, including
but not limited to each of the Crypto Asset Securities, trades at the same price as another unit of
that same asset.
132. These assets, including but not limited to each of the Crypto Asset Securities, are
interchangeable (e.g., any MATIC or fraction thereof is just like any other).  Accordingly, to the
extent the assets change in price, all tokens of the same asset increase or decrease in price in the
same amounts and to the same extent, such that one token is equal in value to any other one token,
on a pro rata basis.
133. The purchase of any particular asset, including but not limited to each of the Crypto
Asset Securities, does not appear to give an investor any special rights not available to any other
investor in that asset, such as separately managed accounts, or different capital appreciation as to the
value of the crypto assets that other investors in the same assets hold.
134. The crypto assets on the MetaMask Swaps platform, including but not limited to
each of the Crypto Asset Securities, are available for sale broadly to any person who creates an
account with MetaMask Swaps, and a MetaMask website displays information (like asset price
changes) in a format highly similar to that offered by registered broker-dealers in the traditional
securities markets, who permit investors to transact in securities.  Consensys makes these crypto
assets available for trading without restricting transactions to those who might acquire or treat the
asset as anything other than as an investment.

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135. For example, the below page on MetaMask Portfolio’s website provides price
movement and other information for MATIC:

136. Investors can access the page for MATIC and other asset-specific pages from the
“Tokens” page on MetaMask Portfolio’s website; they simply search for a particular crypto asset and
are redirected to a page where Consensys provides additional information about that crypto asset.
The information on each asset-specific page includes, but is not limited to: (i) market cap; (ii) the 24-
hour total volume for the crypto asset; (iii) circulating supply; (iv) historical information about the
“price” of the asset including its “all-time high” price and the option to view the asset’s price history
over the last day, week, month and year including as a percentage return on investment; and (v) the
opportunity to trade the asset using MetaMask Swaps.  Consensys states that it uses information
gathered from third-party sources as the basis for the asset-specific information displayed on
MetaMask Portfolio.  Because Consensys has not registered as a broker, there is no formal
mechanism to ensure the accuracy or consistency of the information Consensys discloses about the
crypto assets it makes available for sale, including each of the Crypto Asset Securities.

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137. Consensys does not restrict how many units of a crypto asset, including but not
limited to each of the Crypto Asset Securities, any given investor may purchase.  Moreover,
investors are not required to purchase quantities tied to a purported non-investment “use” that may
exist for the asset, if any.  To the contrary, investors may and typically do purchase these assets in
any amount.
138. The assets available for sale on the MetaMask Swaps platform, including but not
limited to each of the Crypto Asset Securities, are transferable and immediately eligible for resale on
the MetaMask Swaps platform, or other crypto asset trading platforms without any apparent
restrictions on resale (including as to the prices or amounts of resale, or the identity of the new
buyers).
139.  Consensys has brokered crypto assets that have been the subject of prior SEC
enforcement actions based upon their status as crypto asset securities.  Those crypto assets include
but are not limited to the following assets for which Consensys has offered brokerage services:
AMP (the AMP token, available through MetaMask Swaps since October 2020), AXS (Axie Infinity
Shards, available since November 2020), BNB (a token of the Binance blockchain, available since
March 2021), CHZ (discussed below), COTI ( the COTI token, available since October 2020), DDX
(the DerivaDAO token, available since December 2020), FLOW (t  he FLOW token, available since
November 2020), HEX (the HEX token, available since October 2020), LCX (the LCX token,
available since October 2020), MANA (discussed below), MATIC (discussed below), NEXO (the
NEXO platform token, available since October 2020), OMG (the OMG Network token, available
since October 2020), POWR (the Powerledger token, available since October 2020), SAND
(discussed below), LUNA (discussed below), RLY (the Rally token, available since October 2020),
XYO (the XYO token, available since October 2020).

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140. Set forth below are additional details regarding a non-exhaustive list of five Crypto
Asset Securities in which Consensys, through its MetaMask Swaps platform, effected transactions
for the accounts of investors.
141. From the time of their first offer or sale, each of these Crypto Asset Securities was
offered and sold, and continued to be offered and sold on Conensys’s platform, as an investment
contract and thus a security.  For each of the Crypto Asset Securities, statements by the crypto asset
issuers and promoters have led investors reasonably to expect profits based on the managerial or
entrepreneurial efforts of such issuers and promoters (and associated third persons).  This was
investors’ reasonable expectation whether they acquired the Crypto Asset Securities in their initial
offering, from prior investors, or through crypto asset brokerage platforms including the MetaMask
Swaps platform.   For each of the Crypto Asset Securities, such statements by issuers and promoters
include statements made and/or available to the investing public during the period when those
Crypto Asset Securities were available for trading through the MetaMask Swaps platform, as well as
other statements described below.
A. MATIC
142. “MATIC” is the native token of the Polygon blockchain.  Polygon, originally called
the Matic Network and rebranded as Polygon in 2021, is a blockchain platform created in 2017 in
Mumbai, India by, among others, Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun.  Since its
creation, Polygon’s founders have remained actively involved with Polygon through “Polygon Labs”
(“Polygon”), an entity they also founded for “the development and growth of Polygon.”
143.  According to the Polygon website, https://polygon.technology/, the Polygon
network is an Ethereum scaling platform that enables developers to build scalable user-friendly
dApps with low transaction fees, purportedly by hosting “sidechains” that run alongside the

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Ethereum blockchain, and allows users to process transactions and initiate the transfer of assets and
technology development on Polygon’s supposedly less congested sidechain network.
144. Polygon issued a fixed supply of 10 billion MATIC tokens.  MATIC holders can earn
additional MATIC for staking their MATIC on the Polygon platform and becoming a validator,
from delegating their MATIC to other validators in return for a portion of the fees collected from
validating transactions, or from staking their MATIC with other third parties, such as crypto asset
platforms that offer staking services.
145. According to the initial whitepaper for MATIC, “Matic Tokens [we]re expected to
provide the economic incentives ... on the Matic Network [now Polygon] ... [W]ithout the Matic
Token, there would be no incentive for users to expend resources to participate in activities or
provide services for the benefit of the entire ecosystem on the Matic Network.”
146. In or around 2018, Polygon sold approximately 4 percent of the total supply of
MATIC in two early rounds of sales raising $165,000 at a price of $0.00079 USD per 1 MATIC and
$450,000 at a price of $0.00263 USD per 1 MATIC.  In April 2019, Polygon sold another 19% of
the total supply of MATIC to the public through a so-called “initial exchange offering” (or “IEO”—
essentially, an initial offer and sale of a crypto asset security on a crypto trading platform) on the
Binance.com crypto asset trading platform at a price of $0.00263 USD per 1 MATIC, raising an
additional $5 million to fund development of the network.
147. From the time of its offering, MATIC was offered and sold as an investment
contract and therefore a security.
148. The price of all MATIC tokens goes up or down together.
149. MATIC has been available for buying and selling through the brokerage services
offered by MetaMask Swaps since at least July 2021.

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150. The information Polygon publicly disseminated would lead a reasonable investor,
including those who purchased MATIC since October 2020, to view MATIC as an investment.
Specifically, MATIC holders would reasonably expect to profit from Polygon’s efforts to grow the
Polygon protocol because this growth would in turn increase the demand for and the value of
MATIC.
151. For example, Polygon stated publicly, including in the whitepaper, that it would pool
investment proceeds through its private and public fundraising to develop and grow its business.
152. Following the IEO, moreover, Polygon engaged in additional MATIC sales, stating
publicly that it was doing so in order to raise the funds needed to support the growth of its network.
On February 7, 2022, Polygon reported on its blog that it raised about $450 million through a
purportedly private sale of its native MATIC token in a funding round to several prominent venture
capital firms.  Polygon reported, “[w]ith this warchest, the core team can secure Polygon’s lead in
paving the way for mass adoption of Web3 applications, a race that we believe will result in
Ethereum prevailing over alternative blockchains.”
153. Polygon has also reported fundraising from other marquee and celebrity investors.
154. Polygon also stated that it would reserve roughly 67% of MATIC to support the
Polygon ecosystem, the Foundation, and network operations.  Another 20% of MATIC was further
reserved to compensate the Polygon team members and advisors, aligning their fortunes with
investors’ with respect to MATIC.
155. In addition, the Polygon blog provides frequent updates on network growth and
developments at Polygon, including, prior to December 2022, weekly statistics on active wallets and
transactions per day, as well as financial metrics such as revenue per day and total network revenue.
156. Polygon has also routinely announced when crypto asset trading platforms have
made MATIC available for trading.

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157. Polygon has explicitly encouraged MATIC purchasers to view MATIC as an
investment in other ways.  For example, in a February 5, 2021 tweet, 14 months after MATIC’s
single biggest price drop, Nailwal compared the token to a prize fighter that came back from defeat
to become a champion:

158. Also, on November 3, 2022, Nailwal stated on Twitter: “I will not rest till
@0xPolygon gets its well-deserved ‘Top 3’ spot alongside BTC & ETH. No other project comes
even close.”  In a May 24, 2022 “Fireside Chat” with CNBC posted on YouTube, Bejelic described
part of “what’s different about Polygon” as: “[w]e are as a team very, very committed, we have a
very hands on approach with all the projects out there, we are working around the clock on
adoption and that is why we are currently the most adopted scaling infrastructure platform.”  Into
2023, the founders of Polygon continued to promote the platform through various social media.
For example, on February 21, 2023, Nailwal tweeted, and Kanani retweeted, “Polygon has grown
exponentially.  To continue on this path of stupendous growth we have crystallized our strategy for
the next 5 yrs to drive mass adoption of web3 by scaling Ethereum.  Our treasury remains healthy
with a balance of over $250 million and over 1.9 billion MATIC.”
159. Since January 2022, Polygon has also marketed that it “burns” MATIC tokens
accumulated as fees, indicating that the total supply of MATIC would decrease.  For example, in
January 2022, Polygon emphatically announced a protocol upgrade that enabled burning in a blog

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post titled, “Burn, MATIC, Burn!”  As Polygon explained in another blog post on its website around
the same time, “Polygon’s MATIC has a fixed supply of 10 billion, so any reduction in the number
of available tokens will have a deflationary effect.”  As of March 28, 2023, Polygon had burned
approximately 9.6 million MATIC tokens.  This marketed burning of MATIC as part of the
Polygon’s network’s “deflationary effect” has led investors reasonably to view their purchase of
MATIC as having the potential for profit to the extent there is a built-in mechanism to decrease the
supply and therefore increase the price of MATIC.
160. In another white paper, Nailwal and others recently announced a revised Polygon
protocol where a new token, POL, would succeed MATIC “as the native token of the Polygon
ecosystem.”  The white paper states that:  “As the successor of MATIC, POL is envisioned to
become an instrumental tool for coordination and growth of the Polygon ecosystem and the main
driver of the vision of Polygon as the Value Layer for the Internet.”
161. The whitepaper lays out a model “to simulate important performance indicators of
the POL-powered ecosystem.”  The model estimates a $5 average POL price during the proposed
10-year period, a significant increase from the current price of MATIC.
B. MANA
162.  “MANA” is the digital token minted by Decentraland.  Decentraland is a virtual
reality platform that began development in June 2015 but was not made available to the public until
its launch in February 2020.  Decentraland was launched through an entity named Metaverse
Holdings by a team of core individual developers: Ariel Meilich, Esteban Ordano, Manual Araoz,
and Yemel Jardi.  Decentraland operates on the Ethereum blockchain.  According to Decentraland’s

33
website, www.decentraland.org, Decentraland is a three-dimensional virtual reality platform, where
users can create, experience, and monetize their content and applications.
163. According to Decentraland’s website, MANA serves as the crypto asset involved in
all transactions in the Decentraland virtual reality ecosystem.  On August 18, 2017, Decentraland
held an initial coin offering in which MANA tokens were exchanged for ETH tokens, raising
approximately $24.1 million.  Currently, there is a total supply of approximately 2.19 billion MANA
tokens.
164. Decentraland offered early contributors to the Decentraland ecosystem a discounted
price when purchasing MANA.
165. From the time of its offering, MANA was offered and sold as an investment
contract and therefore a security.
166. The price of all MANA tokens goes up or down together.
167. MANA has been available for buying and selling through MetaMask Swaps since at
least October 2020.
168. The information Decentraland publicly disseminated would lead a reasonable
investor, including those who have purchased MANA since October 2020, to view MANA as an
investment.  Specifically, MANA holders would reasonably expect to profit from Decentraland’s
efforts to grow the Decentraland protocol because this growth would in turn increase the demand
for and value of MANA.
169. Investor proceeds raised during the MANA ICO were pooled to fund the marketing,
business expenses, and completion of the Decentraland platform.  For instance, on July 5, 2017—a
few weeks before the MANA ICO—Jardi published a blog post detailing Decentraland’s intended
use of revenue from the token sale as follows:

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public; and 20 percent reserved to “incentivize early users, developers, and partners who want to
build within Decentraland.”
173. As Meilich explained in his public blog post, “To incentivize value creation within
Decentraland, extra tokens will be allocated to the [development team], organization, and a reserve
to accelerate Community and Partner engagement.”
174. For example, Decentraland publicly issued a whitepaper (“Decentraland
Whitepaper”) describing the architecture that would be built in the virtual reality platform and steps
that would be taken to support Decentraland’s growth.  It further made clear that the development
of the platform was only beginning, and listed a number of “Challenges” that would need to be
addressed in the development process in order for the platform to succeed.
175. Decentraland has continued to invest efforts in new developments and tools for the
platform.  According to Melich, even after the ICO, Decentraland was still “preparing a land
allocation policy to ensure fair distribution, as well as a method for groups to purchase larger
contiguous plots of land.”  Since the ICO, Decentraland has developed tools for purported use on
its platform (e.g., the “Marketplace” and “Builder” tools).  In a public blog post published on March
19, 2018, the Decentraland team described the marketplace tool as the “first ... in what will be a
series of tools.”
176. Additionally, the Decentraland Whitepaper explained how the Foundation would
“Foster[] the Network” in that it will “hold contests to create art, games, applications, and
experiences, with prizes contingent on meeting a set of milestones.  At the same time, new users will
be assigned allowances, allowing them to participate in the economy immediately.”  The
Decentraland Whitepaper further claimed, “These financial incentives will help bootstrap the utility
value of the network until it independently attracts users and developers.”

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177. The Decentraland Whitepaper and website have also marketed that the protocol
“burns” (or destroys) MANA tokens when used within the Decentraland ecosystem.
178. The Decentraland Whitepaper is still available on the Decentraland website.
C. CHZ
179. CHZ is a token on the Ethereum blockchain, advertised as the “native digital token
for the Chiliz sports & entertainment ecosystem currently powering Socios.com,” a sports fan
engagement platform built on the Chiliz blockchain.  The Chiliz blockchain was introduced in early
2018 by protocol founder and current CEO Alexandre Dreyfus, under a Maltese entity named HX
Entertainment Ltd.  The Chiliz whitepaper describes the Chiliz protocol as “a platform where fans
get a direct Vote in their favorite sports organizations, connect and help fund new sports and
esports entities.”
180. The CHZ token purportedly allows “fans to acquire branded Fan Tokens from any
team or organization partnered with the Socios.com platform and enact their voting rights as their
fan influencers.”  Examples of voting polls that allow holders of “Fan Tokens” (purchased with
CHZ tokens) to influence team decisions with their vote include selecting player warm-up apparel
and choosing team pennant designs.
181. According to the Chiliz whitepaper dated November 2018, during the second quarter
of 2018 the Chiliz team completed fund-raising of approximately $66 million in exchange for
approximately 3 billion CHZ in “Chiliz’s Token Generation Event” purportedly “executed via
private placement.”  CHZ were originally minted in 2018, and there is a maximum supply of
8,888,888,888 CHZ tokens.  However, it was not until the second quarter of 2019 that Chiliz made
“Fan Tokens” on Socios.com available for purchase with CHZ.
182. CHZ has been available for buying and selling through the MetaMask Swaps
platform since at least December 2020.

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183. From the initial “private” offering of CHZ tokens in 2018, through public
statements made in 2023, the Chiliz team has disseminated information and made statements,
including statements made and available during the period when CHZ was available to trade on
MetaMask Swaps, that have led CHZ holders reasonably to view CHZ as an investment in and to
expect profits from the team’s efforts to develop, expand, and grow the platform, which, in turn,
would increase the demand for and the value of CHZ.
184. For example, the Chiliz website, www.chiliz.com, introduces the Chiliz team, which
is “comprised of nearly 350+ cross-industry professionals across 27 different nationalities and is
constantly growing.”  The Chiliz team operates both the Chiliz protocol and Socios.com.
185. In fact, the whitepaper and other public statements by Chiliz also identify several
members of the Chiliz leadership team, the bios of these “Leadership” or “Advisory” teams, and
their past entrepreneurial and technology experiences and successes.  The Chiliz website touts that
the Chiliz team is “building the web3 infrastructure for sports and entertainment.”
186. The Chiliz team also stated publicly that it would use the proceeds from CHZ sales
to fund the development, marketing, business operations, and growth of the Chiliz protocol and,
consequently, to increase the demand for CHZ in connection with the protocol.  For example, the
whitepaper explains that funding raised through token sales would be allocated as follows: 58% to
Operational Expenses (“A majority of funds will be passed on from the Issuer to an affiliate to
develop the Socios.com platform, secure partnerships & realize the platform’s digital
infrastructure.”); 20% to User Acquisition (“Funds will be used to acquire new users for the
Socios.com platform and grow engagement in its voting utilities.”); 10% to Corporate Structuring;
5% to Security and Legal; and 7% to Ecosystem Support.

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187. Moreover, 5% and 3% of the total CHZ tokens distributed were allocated to the
Chiliz team and an advisory board, respectively—the two groups responsible for the creation and
development of the platform—aligning the fortunes of management with those of CHZ investors.
188. The CHZ whitepaper further makes evident the mutuality of interest (and the
alignment of fortunes) between promoter and investor when it cautions that “if the value of BTC,
ETH and/or Chiliz fluctuates, the Company may not be able to fund development to the extent
necessary, or may not be able to develop or maintain the Socios.com Platform in the manner that it
intended.”
189. The Chiliz team also frequently touts the growth potential in the sports and esports
industry that it seeks to monetize through the Chiliz team’s efforts to expand its platform.  For
example, the CHZ whitepaper highlighted the size of the gaming industry and potential for esports
revenue as well as the use of CHZ to drive and monetize fan engagement for traditional sports.  In
reference to the June 2018 “Token Generation Event,” the whitepaper stated:  “[w]e are no longer
pursuing fundraising measures, instead focusing our efforts on leveraging accrued resources to
realize the Chiliz/Socios.com vision.”  The whitepaper continued:  “[w]ith foundations set, Chiliz
and the Socios.com platform it powers will look to use Football as a benchmark to expand our
Tokenized Fan Voting model to other sports in order to cater to a global marketplace where
different competitive verticals are dominant – prime examples of diversification are Cricket in the
Indian market, Baseball for Japan, and the like.”
190. Public statements that the Chiliz team and its executives made indicate that CHZ
tokens are primarily deployed for purchasing “Fan Tokens” on Socios.com and that the demand for
and price of CHZ tokens is directly reliant on demand for Socios fan tokens and their benefits.
191. The Chiliz team also made other public statements that emphasize the economic
reality inherent in the design of the Chiliz blockchain’s reliance on CHZ to function—that as Chiliz

39
is able to grow its platform by partnering with more teams, and those teams grant attractive
opportunities to token holders, the value of the respective “Fan Tokens” will increase, and in turn,
the value of CHZ will also increase.
192. For instance, the FAQ section located on the Chiliz website, which was publicly
available from at least December 2021 to December 2022, provided:  “Demand for the Chiliz token
will increase as more esports teams, leagues and game titles are added to the platform, and as more
fans want voting rights.”
193. Chiliz’ CEO has echoed this same sentiment in other public statements.  In February
2020, he stated:  “Tens of thousands of regular football fans have already started to use crypto,
purchasing $CHZ in order to buy Fan Tokens, and in time we expect millions more to do so as we
continue to add more partners to the platform and increase our reach and grow the brand.”  In
March 2021, he tweeted:  “Monthly Active Users (MAU) of the @socios app, powered by $CHZ.
You can see how the demand for $CHZ (exchanges, Etherscan wallets, ...) exploded.  Everything is
correlated.  We are building a mainstream consumer-facing product, powered by @chiliz
blockchain.”  And in February 2023, he tweeted:  “I’m biased but I’m very confident that the Chiliz
ecosystem is gonna bring a lot of value to fans, sports properties, and innovation in general.  Long
journey ahead of us. $CHZ.”
194. The Chiliz team has also made efforts to drive secondary trading of CHZ by offering
the token on crypto asset trading platforms.  For example, an earlier version of the whitepaper
highlighted “ongoing discussions” to offer CHZ on trading platforms across Asia, and the Chiliz
website features a “Listing Content and Q&A” document reflecting a proposal to offer CHZ on the
Binance DEX platform.
195. The Chiliz team also tells investors that it plans to engage in “burning” (or
destroying) CHZ tokens as a mechanism to support the price of CHZ by reducing their total supply.

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For instance, in 2020, the Chiliz team announced through its Fan Token exchange that it would
burn 20% received in net trading fees, 10% of proceeds from “Fan Token” offering sales, and 20%
of net proceeds of NFT & Collectibles.  As with other crypto asset securities set forth herein, this
marketed burning of CHZ has led investors reasonably to view their purchase of CHZ as having the
potential for profit.
D. SAND
196.  “SAND” was created on the Ethereum blockchain as the native token of the
Sandbox platform, a virtual gaming platform first released in 2012 by Pixowl, Inc. (“Pixowl”) as a
game for download on mobile phones.  Pixowl, which is headquartered in San Francisco, was
founded in 2011 by Arthur Madrid (“Madrid”) and Sebastien Borget (“Borget”).  In 2018, Animoca
Brands, Inc. (“Animoca”), headquartered in Hong Kong, acquired Pixowl and announced its
intention to build a new 3D version of the Sandbox by leveraging blockchain technology.  After
Pixowl’s acquisition, the Sandbox’s intellectual property, along with the rest of Pixowl’s assets, were
transferred to TSB Gaming Ltd (“TSB”), a wholly owned subsidiary of Animoca.  Madrid is CEO of
TSB, and Borget is the COO.
197. According to Sandbox’s website, SAND is required to access the Sandbox platform,
participate in the platform’s governance, and earn rewards through the staking program on the
platform.
198. On or about May 23, 2019, before the minting of SAND in July 2019, Animoca
raised approximately $2.5 million in cash and crypto assets through TSB via the issuance of Simple
Agreements for Future Equity (“SAFEs”) and SAND tokens, to “fund the development of the
upcoming blockchain version of The Sandbox.”  According to Animoca’s May 23, 2019 press
release, the majority of investors allocated their investment to the purchase of both SAND tokens
and future equity in TSB via the SAFE agreements (in the amount of $2 million), while some

41
investors allocated their investment exclusively to the purchase of SAND tokens ($500,000).  Per the
release, the funding round was led by Hashed, for approximately $1 million, and also included a
number of other crypto venture capital investors.
199. TSB then minted a total supply of 3 billion SAND on the Ethereum blockchain in or
around July 2019 and offered and sold SAND through purportedly private sales and in an IEO that
raised $3 million on the Binance.com crypto asset trading platform starting August 13, 2020.
200. SAND has been available for buying and selling through the MetaMask Swaps
platform since approximately October 2020.
201. The information TSB publicly disseminated has led SAND holders, including those
who have purchased SAND since May 2022, reasonably to view SAND as an investment in and to
expect to profit from TSB’s efforts to grow the Sandbox protocol, which, in turn, would increase
the demand for and the value of SAND.
202. On its blog posts announcing “exchange listings,” Sandbox touted its efforts to
obtain “listings” and the SAND token’s liquidity in the secondary market. For example, in a
September 21, 2021, Medium blog post, Sandbox stated that “$SAND is listed on over 60 global
cryptocurrency exchanges, including a dozen of the top exchanges by market capitalization.”
203. In addition, the Sandbox stated that it would pool the proceeds from the private
token sales and the IEO to develop and promote use of the platform. For example, the May 23,
2019, press release stated: “[t]he funds raised through this transaction will be used to grow the
development team and infrastructure for the [Sandbox] Game Platform, support marketing efforts
through the acquisition of creators and IP licenses, and provide for security, legal, and compliance
expenses as well as general and administrative costs.”  The Sandbox whitepaper similarly described
identical uses for the $3 million in funds intended to be raised during the IEO.

42
204. Moreover, according to the Sandbox whitepaper, of the 3 billion SAND tokens that
were initially minted, 19% were to be allocated to the Sandbox founders and team, and another
25.8% were to be allocated to the Company Reserve.
205. In addition, the Sandbox’s Medium blog post on July 25, 2019, stated that “an
interesting feature of [the $SAND] token is that it can accrue in value over time, due to the fact that
it is scarce.  There will be a limited supply of 3 billion units of $SAND available.”
206. Moreover, TSB stated publicly that it would take steps to manage the market for
SAND, including the SAND whitepaper stating that the Sandbox team controls the supply of
SAND tokens and has implemented a “controllable supply mechanism, such as purchasing SAND
from multiple exchanges,” and that “while the total supply of SAND is fixed, the initial amount of
SAND offered will provide a scarcity effect reducing the SAND available per capita and therefore
fostering demand.”
207. Additionally, in many instances, Animoca has touted the backgrounds of Pixowl,
TSB, and the Sandbox core members, including Madrid and Borget, in describing the success and
future development of the Sandbox:
• After the acquisition of Pixowl, Yat Siu, the co-founder and director of Animoca,
stated in a press release, dated August 27, 2018 (the “2018 Press Release”) that
“Pixowl’s experienced developers will significantly increase our development
capabilities. Its founders are highly respected game industry veterans who have
developed multimillion dollar franchises. We believe the blockchain version of
The Sandbox has incredible potential ... We look forward to utilising the many
opportunities for growth conferred by this acquisition.”

• In the 2018 Press Release, Madrid also commented: ‘“Animoca Brands is a
perfect fit for Pixowl and we are happy to add our brand relationships to its
portfolio while accelerating growth for our key IP, The Sandbox ...”

• The 2018 Press Release also touted that “Ed Fries, the creator of Microsoft
Game Studios and co-founder of the Xbox project, is a special advisor to The
Sandbox’s original game developer Pixowl” and will therefore continue to serve
on the advisory team.

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• The Sandbox whitepaper further provided: “We have a strong product roadmap
ahead and a top team to execute a strong vision to build a unique virtual world
gaming platform where players can build, own, and monetize their gaming
experiences and spread the power of blockchain as the lead technology in the
gaming industry.”

208. Moreover, the Sandbox whitepaper describes that the role of the “Sandbox
Foundation” is to support the ecosystem of the Sandbox by, among other things, offering grants to
incentivize high quality content and game production on the platform and further notes that the
“overall valuation of the metaverse grows through the valuation of all games funded by the
Foundation, creating a virtuous circle to enable funding bigger games.”  The Sandbox’s Gitbook also
notes that the Sandbox Foundation has, among other things, (a) supported play-to -earn tournaments
and cross-gaming to encourage the broader adoption of SAND and (b) supported marketing
activities contributing to the growth of awareness about NFTs, Metaverse and SAND adoption,
including co-marketing with exchanges and influencers.
 E. LUNA
209. LUNA was a token native to the Terra blockchain, created by Terraform and its
founder, Do Kwon.  The Terra blockchain was launched in April 2019 along with the creation of
one billion LUNA tokens.
210. At all relevant times, Terraform and Kwon retained hundreds of millions of LUNA
tokens for themselves.
211. At least one “bridge,” called “Shuttle,” allowed LUNA holders to create “wrapped”
versions of LUNA (“wLUNA”).  The wLUNA tokens were identical in all material respects to
LUNA, except that they could be traded on the Ethereum blockchain, as opposed to the Terra
blockchain.

44
212. From the time of their offerings through at least May 2022, LUNA and wLUNA
were offered and sold as investment contracts and therefore securities.
213. Investors tendered fiat currency and/or crypto assets to obtain LUNA and wLUNA.
214. Each unit of LUNA was fungible with and was indistinguishable from any other unit
of LUNA.  Each unit of wLUNA was fungible with and was indistinguishable from any other unit
of wLUNA.  LUNA and wLUNA prices were the same, and they were exchangeable with each
other on a one-to -one basis.  Any holder of wLUNA had the right and ability at any time to
exchange the wLUNA for LUNA.
215. Thus, investors in LUNA and wLUNA shared equally in price increases and
decreases, such that if one investor profited, all investors did so as well in equal proportion to their
total LUNA or wLUNA holdings.
216. LUNA or wLUNA was first made available for trading through MetaMask Swaps in
January 2021.
217. The repeated drumbeat of information Terraform publicly disseminated about
LUNA or wLUNA and Terraform’s plans to undertake efforts to make those assets more valuable
led reasonable investors, including those who purchased LUNA or wLUNA since January 7, 2021,
to view LUNA and wLUNA as investments into Terraform’s efforts.  Specifically, LUNA and
wLUNA holders would reasonably expect to profit from Terraform’s efforts to grow the Terraform
blockchain because this growth would in turn increase the demand for, and the value of, LUNA and
wLUNA.
218. Terraform and Kwon told investors that Terraform would use proceeds from LUNA
sales to fund operations and help build and expand the Terraform ecosystem.  For example, in a July
2018 token sale agreement, Terraform represented to potential investors that the funding round was
“in furtherance of the establishment and operation of the systems” to be developed by Terraform.

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219. In a 2021 public interview, Terraform’s business development lead stated that
LUNA “is the ‘equity’ in our co[mpany].”
220. On April 7, 2021, Kwon posted on X, “in the long run, $Luna value is actionable—it
grows as the ecosystem grows.”  Luna holders could simply “sit back and watch me kick ass.”
221. The Terraform Director of Special Projects similarly stated in a June 2021 video
presentation, “[o]wning LUNA is essentially owning a stake in the network and a bet that the value
will continue to accrue over time.”
222. In marketing materials, Terraform further touted the professional expertise of its
team, claiming that Terraform was “led by serial entrepreneurs” and was a team with “deep relevant
expertise.”
223. On December 28, 2023, based on these facts, and others, a federal court in the
Southern District of New York found that both LUNA and wLUNA have been offered and sold as
investment contracts.  SEC v. Terraform Labs Pte. Ltd et al., 23-cv  -1346, 2023 WL 8944860 (S.D.N.Y.
Dec. 28, 2023).
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
224. “Proof of Stake” (“PoS”) refers to a consensus mechanism used by some blockchain
networks to reach agreement about which transactions are valid, to add transactions in new blocks
to the blockchain, and to reward participants with additional crypto assets.
225. A blockchain network using a PoS consensus mechanism typically selects a
“validator” from a group of blockchain participants who have agreed to certain requirements
necessary to maintain the blockchain and add new blocks.

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226. To be considered for selection into the group or pool of validators, a potential
validator must among other things commit, or “stake,” a pre-established minimum set amount of
the blockchain’s native asset (e.g., ETH for the Ethereum blockchain).
227. On Ethereum, a validator must stake 32 ETH, and these staked assets are “locked
up” while staked in the blockchain’s PoS consensus mechanism, in part to incentivize validators to
faithfully perform required functions.
228. A “correction penalty” is deducted from the staked crypto assets of validators who
do not meet a variety of standards including server uptime, consistency, and accuracy.
229. “Slashing”— forced removal of a validator’s node from the network and an
associated gradual loss of all of its staked ETH—occurs when a validator engages in affirmatively
malicious activity.
230. Conversely, validators earn rewards for their efforts, in the form of additional
amounts of ETH—for example, by timely voting on proposed blocks, proposing new blocks, and
participating in other consensus-related activities.
231. To create a new block to add to the chain of blocks, the protocol chooses a validator
from among those that have staked.  The more the holder stakes, and the less server downtime a
potential validator exhibits, the more likely that holder is to be selected as a validator and receive the
maximum staking reward.  Thus, the most successful staking operations maximize the chances of
being selected by staking a large number of assets across nodes and having better computer
resources to minimize server downtime.
232. Since September 2022, the Ethereum network has employed the PoS mechanism
described above.
233. To serve as an Ethereum validator and potentially earn rewards, a validator must
stake at least 32 ETH (worth more than $100,000 as of June 25, 2024) and run an Ethereum node.

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234. The ETH used for staking is held in a smart contract called the “Beacon Deposit
Contract” (referred to herein as the “Ethereum validator deposit contract,” which is part of the
Ethereum staking and validation system).
235. For those staking ETH, “rewards” are paid out in the form of additional ETH.  The
amount of rewards that each validator earns depends on the validator’s performance.
236. For example, a validator earns rewards for keeping its node online and participating
in various blockchain maintenance activities, including but not limited to timely voting and
proposing new blocks.
237. Conversely, validators can be penalized for poor performance or slashed for
malicious activity.
B. Liquid Staking Pool Providers:  Lido and Rocket Pool
238. Lido and Rocket Pool have each created and maintained respective staking
programs, designed to capture the staking rewards described above.
239. Lido and Rocket Pool each call their program a “liquid staking” program because—
as described below—investors are issued a tradable token in exchange for depositing funds into the
program.  This token represents the investor’s interest in the program.  The token issued in
exchange is referred to as a “liquid staking token” or “LST” and the LST can be traded on the
secondary market.
240. In Lido, the LST is called stETH; in Rocket Pool, the LST is called rETH.
241. The amount of LST an investor receives is proportional to the amount of ETH they
deposit.
242. Thes  e staking programs allow investors to both obtain the rewards of staking and
also purportedly retain the ability to redeem the value of their investment at any time.

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i. The Lido Staking Program Is An Investment Contract.
243. Lido launched its liquid staking platform in December 2020.
244. To participate, investors deposit ETH with Lido.
245. In return, Lido issues the investor another crypto asset, “stETH,” representing the
investor’s pro rata interest in Lido’s staking program, including the investor’s original deposit of
ETH plus any accumulated returns.
246. Lido then uses investors’ deposited ETH in the Ethereum consensus mechanism to
earn staking rewards—the financial returns for investors.
247. Specifically, Lido pools the ETH deposited by investors into a Lido smart contract,
which initiates the creation of a validator by depositing a 32 ETH bundle to the Ethereum validator
deposit contract.
248. As of June 25, 2024, over 28% of all staked ETH on Ethereum is staked in Lido’s
staking program.
249. Lido takes, as a fee, 10% of the staking rewards earned.
250. The remaining rewards are accrued, pro rata, by stETH token holders.
251. Lido markets its staking program as an investment opportunity.
252. Lido also leads investors to reasonably expect that investors’ profits will come from
Lido’s efforts.
253. According to Lido’s website, from December 2020 to February 2024, Lido’s staking
program returned an annualized percentage gain of 3% to 9%.
254. In a blog post dated December 28, 2020, Lido stated:  “Lido allows users to stake
any amount of ETH – without the need to maintain complex infrastructure.”

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255. From at least June 2021 to June 2024, in a “Help” article on its website, Lido stated
that staking “requires expert knowledge and complex and costly infrastructure” and that through
Lido “ users can eliminate these inconveniences.”
256. Lido claimed in an October 2020 document posted to its website that it is “more
profitable” than other staking pool providers because of its fee model and the quality of its node
operators.
257. From at least February 2023 to June 2024, another “Help” article on Lido’s website
claims to allocate investors’ staked ETH across multiple, high-quality validator node operators (that
is, participants in the Ethereum network consensus mechanism), minimizing the risks associated
with staking ETH.
258. In the same Help article, Lido states that it elects “professional and reputable node
operators” and that the penalty and slashing risks are reduced “given the quality of the Lido
validator set and its proven track record.”
259. In short, Lido purportedly offers investors a “simplified participation in staking”—
deploying its resources and expertise to achieve staking rewards that individual investors typically
would not be able to achieve on their own.
260. The holder of any stETH—whether issued directly from Lido or purchased in the
secondary market—has the right to deliver the stETH to Lido to get back the pro-rata staked ETH
plus accrued rewards.
261. Lido treats all investors’ deposited ETH as fungible.  It does not purport to segregate
investor funds.
262. In light of the above, Lido offered and sold its staking program as an investment
contract.

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ii. The Rocket Pool Staking Program Is An Investment Contract
263. Rocket Pool launched its platform in October 2021.
264. To participate, investors deposit ETH with Rocket Pool.
265. In return, Rocket Pool issues another crypto asset, “rETH,” representing the
investor’s pro rata interest in Rocket Pool’s staking program, including the investor’s original deposit
of ETH plus any accumulated returns.
266. Rocket Pool then uses investors’ deposited ETH in the Ethereum consensus
mechanism to earn staking rewards—the financial returns for investors.
267. Specifically, Rocket Pool pools the ETH deposited by investors into a Rocket Pool
smart contract, which initiates the creation of a validator by depositing a 32-ETH bundle to the
Ethereum validator deposit contract.
268. Rocket Pool takes a 0.05% fee of the staking rewards it earns.
269. The remaining staking rewards accrue, pro-rata, to investors.
270. Rocket Pool also markets its staking program as an investment opportunity.
271. According to Rocket Pool’s website, rETH “accrues value over time.”
272. Rocket Pool also leads investors to reasonably expect that investors’ profits will
come from the efforts of Rocket Pool.
273. As of June 2024, Rocket Pool advertised on its website an annual percentage return
of approximately 3.11%.
274. In an FAQ available on its website, Rocket Pool notes that its staking service makes
staking available to investors who might not otherwise have the technical expertise necessary to
interact with smart contracts or keep a node running 24/7.
275. Indeed, according to Rocket Pool’s FAQ, its program “removes several high barriers
to entry that exist with Proof of Stake on Ethereum.”

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276. In a January 22, 2021, Medium Post, Rocket Pool stated that its program was “an
easy and permissionless way to engage in staking without needing to run any staking infrastructure
or even have 32 ETH.”
277. The Rocket Pool FAQ states that it will “allow anyone to earn rewards on deposits
as small as 0.01 ETH.”
278. On its website, Rocket Pool also attempts to differentiate itself from other staking
pool providers, claiming that “Rocket Pool is the only staking platform with a perfect score on
ethereum.org.”
279. According to Rocket Pool’s website, its protocol is highly secure and its “smart
contracts have been extensively audited, multiple times, by some of the best auditors in the
Ethereum ecosystem.”
280. Rocket Pool also touts other reasons for investors to stake their ETH with Rocket
Pool.
281. In the January 2021 Medium post, Rocket Pool notes that the value of rETH is
“protected against node slashing and downtime by several built in insurance mechanisms.”
282. Specifically, Rocket Pool requires individuals that run Rocket Pool validator nodes to
put up collateral to protect against losses that may result from penalties and slashing.
283. Rocket Pool’s website states that “every rETH token is exactly the same, you will
automatically receive the benefits of staking just by holding the token!” (Emphasis in
original.)
284. In light of the above, Rocket Pool offered and sold its staking program as an
investment contract.
285. Neither Lido nor Rocket Pool have ever filed registration statements with the SEC
for the offer and sale of their respective staking program investment contracts.

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C. Consensys—through MetaMask Staking—Offers and Sells the Lido and
Rocket Pool Investment Contracts.
i. Through MetaMask Staking, Consensys Promotes , Offers, and Sells the Lido and Rocket
Pool Investment Contracts To Its Users.
286. On January 13, 2023, Consensys publicly announced the release of a program called
MetaMask Staking.
287. Consensys created MetaMask Staking to offer and sell the Lido and Rocket Pool
staking program investment contracts to investors.
288. The January 13 announcement stated:  “MetaMask Staking allows you to engage in
liquid staking with two prominent providers, Lido and Rocket Pool, where by you can deposit your
ETH and receive a token representing the value of your stake in return.”
289. It called MetaMask Staking “an easy and convenient way to stake ETH.”
290. On January 13, 2023, Consensys posted on the MetaMask Twitter account:  “We are
extremely happy to announce that you can now stake ETH with Lido or Rocket Pool through the
[MetaMask] Portfolio Dapp.”  This post included an image advertising “5.22% rewards” with Lido
and “4.59% rewards” with Rocket Pool—highlighting the former as the “Highest rewards.”
291. On May 16, 2023, Consensys posted on the MetaMask Twitter account:  “[U]sers
can now stake and withdraw ETH directly from our liquid staking providers, Rocket Pool and
Lido.”  And “Get started here,” pointing to a link to the MetaMask portfolio website.
292. In promotional materials, Consensys claimed that MetaMask Staking would make it
easier for individual holders of ETH to participate in staking.
293. Specifically, in its January 13, 2023, announcement on its website, Consensys stated:
“[S]taking can be a convoluted and complicated process for end-users.  MetaMask Staking will offer
an easy-to -understand and trusted entry point for users interested in staking.  Through this new

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feature, users can compare the rewards rate, network control, and popularity of different liquid
staking providers and choose the one they want to stake with.”
ii. Consensys’s MetaMask Staking User Interface.
294. To use MetaMask Staking, investors must have ETH in their MetaMask Wallet.
295. First, from the browser extension or mobile app, the investor clicks on “Stake,” or
“Staking.”  They are then taken to the MetaMask Portfolio site, where they can then choose “ETH.”
296. At this point, Consensys’s graphical interface presents the investor with two options:
Lido and Rocket Pool.

297. Consensys’s MetaMask Staking program will highlight the option with the “highest
rewards.”
298. If either Lido or Rocket Pool is at or near capacity, Consensys’s MetaMask Staking
software disables the ability to stake with that program.
299. In any event, an investor can choose either the Lido or Rocket Pool staking program
by clicking “Stake.”
300. On the following screen, an investor can input the number of ETH that they would
like to invest in one of the staking program investment contracts and click “review.”

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301. At that point, Consensys’s MetaMask Staking software shows the investor a screen
with the number of the staking pool tokens they will receive in return, their “estimated rewards,”
and the “estimated gas fee.”
302. If the investor wishes to proceed with their request to invest in the staking program
investment contract, the investor clicks “confirm.”
303. If MetaMask Staking successfully completes the transaction, the investor will see a
screen that says, “Transaction Complete.”
  iii. Consensys Offers and Sells the Lido and Rocket Pool Investment Contracts To Investors.
304. Accordingly, Consensys offers and sells the Lido and Rocket Pool investment
contracts to investors through the MetaMask Staking platform.
305. Consensys makes this process appear simple and easy to non-technical investors,
while performing the technical series of actions necessary to transfer the investor’s ETH to Lido or
Rocket Pool and transfer stETH or rETH to the investor in return.
306. When the investor clicks “confirm,” this signals the MetaMask Staking software to
take the steps necessary to exchange the investor’s ETH for rETH or stETH.   Specifically,
Consensys has programed MetaMask Staking software to take the steps described below.
307. First, Consensys’s MetaMask Staking software reads the private key associated with
the ETH in the investor’s MetaMask Wallet.
308. Second, using this key, the software creates a blockchain transaction and transfers
the investor’s ETH from the investor’s MetaMask Wallet into a smart contract called the MetaMask
Staking Aggregator Router Smart Contract (the “MM Staking Router Smart Contract”).
309. The MM Staking Router Smart Contract has its own Ethereum blockchain address.
310. The investor has no control over the MM Staking Router Smart Contract.

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311. The MM Staking Router Smart Contract address temporarily holds the investor’s
ETH.
312. Although Consensys has programmed its   MetaMask Staking software so that
Consensys can take a fee for each transaction, Consensys currently sets the fee variable at zero (i.e.,
it does not take a fee at this time).
313. Consensys could, however, change the software at any time to assess a fee, in which
case the amount of the fee would be diverted from the MM Staking Router Smart Contract into a
blockchain address designated by Consensys.
314. Third, Consensys’s software transfers the investor’s ETH from the MM Staking
Router Smart Contract to the Lido or Rocket Pool Proxy smart contract (deployed by Lido and
Rocket Pool, respectively).
315. These Proxy smart contracts mint stETH or rETH, respectively, upon receiving a
deposit of ETH, and, if the MM Staking Router Smart Contract sends ETH to the Proxy smart
contracts, the Proxy smart contracts will transfer newly minte d stETH or rETH, respectively, to the
MM Staking Router Smart Contract.
316. Fourth, the MM Staking Router Smart Contract transfers the stETH or rETH, as the
case may be, to the investor’s MetaMask Wallet.
317. As of March 11, 2024, investors had invested 100,252 ETH in the Lido staking
program through MetaMask Staking and 8,375 ETH in the Rocket Pool staking program through
MetaMask Staking.
318. As of March 11, 2024, Consensys, through MetaMask Staking, offered and sold the
Lido staking program to 32,449 unique blockchain addresses and offered and sold the Rocket Pool
staking programs to 2,215 unique blockchain addresses.

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319. For its part, Lido embraced MetaMask Staking as a platform through which its
staking program would be offered and sold.
320. On January 17, 2023, Lido announced on its blog that “Ethereum staking with Lido
is now live on MetaMask!  Stake your ETH on MetaMask to earn yield and secure the Ethereum
network from the comfort of your wallet.”
321. Moreover, a former Lido employee testified that “in terms of a distribution channel
[Consensys’s MetaMask was] a very highly valued target.”
322. Accordingly, by the conduct described above, Consensys offered   and sold, and
continues to offer and sell, investment contracts for Lido and Rocket Pool, participating directly in
the distribution of securities from the issuers—Lido and Rocket Pool—to the investor.
V. CONSENSYS WAS REQUIRED TO, BUT DID NOT, REGISTER AS A BROKER
WITH RESPECT TO METAMASK SWAPS.
323. As fully set forth in the preceding paragraphs, Consensys, through MetaMask Swaps,
used the means and instrumentalities of interstate commerce to engage in the business of effecting
transactions in securities for the account of others by, for example, soliciting potential investors in
crypto asset securities, holding itself out as a place to buy and sell crypto assets (including crypto
asset securities), providing investment advice by highlighting the “best” prices or “best” value, and
otherwise facilitating trading in crypto asset securities by creating customer wallets (i.e., “accounts”),
routing customer orders, handling customer crypto asset securities through Consensys-operated
smart contract addresses, facilitating order execution by submitting blockchain transactions to a
Consensys node, and receiving transaction-based compensation for doing so.  Consensys was

57
therefore required to register with the SEC as a broker or operate pursuant to an exemption or
exception but did not do so.
VI. CONSENSYS ALSO ACTS AS A BROKER WITH RESPECT TO THE LIDO
AND ROCKET POOL INVESTMENT CONTRACTS.
324. Through its MetaMask Staking program, Consensys also acts as a broker by effecting
transactions in the Lido and Rocket Pool investment contracts for the account of others.
325. As alleged above, Consensys solicits potential investors, holds itself out as a place to
buy and sell the investment contracts, and recommends which of the two investment contracts will
offer the highest rewards.
326. Consensys then effects the transaction on the investor’s behalf.
327. Specifically, as noted, Consensys through the MetaMask Staking software handles the
investor’s assets by removing the investor’s ETH from the investor’s MetaMask wallet and
transferring it to the MM Staking Router Smart Contract, which, in turn, transfers it to the Lido or
Rocket Pool proxy smart contract.
328. Finally, Consensys’s software, transfers the acquired token—stETH or rETH—into
the investor’s MetaMask Wallet.

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

329. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 329.
330. By engaging in the acts and conduct described in this Complaint, Consensys, a
person other than a natural person under the Exchange Act, is a broker and made use of the mails
and the means and instrumentalities of interstate commerce to effect transactions in, or to induce or
attempt to induce the purchase or sale of, securities for the account of others, without registering as

58
a broker, and without having an exemption or exception from such registration.
331. By reason of the foregoing, Consensys violated, and, unless enjoined, will continue
to  violate Exchange Act Section 15(a) [15 U.S.C. § 78o(a)].
SECOND CLAIM FOR RELIEF
Violations of Securities Act Sections 5(a) and 5(c)

332. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 331.
333. By virtue of the foregoing, Consensys, through its offers and sales of the Lido and
Rocket Pool staking program investment contracts, directly and indirectly: (a) without a registration
statement in effect as to those securities, (1) made use of means or instruments of transportation or
communication in interstate commerce or of the mails to sell securities through the use or medium
of any prospectus or otherwise, and (2) carried or caused to be carried through the mails or in
interstate commerce, by any means or instruments of transportation, securities for the purpose of
sale or for delivery after sale; and (b) made use of means or instruments of transportation or
communication in interstate commerce or of the mails to offer to sell or offer to buy, through the
use or medium of a prospectus or otherwise, securities as to which no registration statement had
been filed.
334. By reason of the conduct described above, Consensys violated, is violating, and,
unless enjoined, will continue to violate Securities Act Sections 5(a) and 5(c) [15 U.S.C. §§ 77e(a) and
77e(c)].
PRAYER FOR RELIEF
 WHEREFORE, the Commission respectfully requests that the Court enter a Final
Judgment:

59
I.
Permanently enjoining Defendant and its agents, servants, employees and attorneys and all
persons in active concert or participation with any of them from violating, directly or indirectly,
Securities Act Sections 5(a) and (c) [15 U.S.C. §§ 77e(a), 77e(c)] and Exchange Act Section 15(a) [15
U.S.C. § 78o(a)].
II.
Ordering Defendant to pay civil monetary penalties under Securities Act Section 20(d)
[15 U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)]; and
III.
Granting any other and further relief this Court may deem appropriate or necessary for the
benefit of investors pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)].
JURY DEMAND
 The Commission demands a trial by jury.
Dated:  New York, New York
June 28, 2024
/s Jorge G. Tenreiro___________________________
Jorge G. Tenreiro
Samuel Wasserman
Daphna Waxman
Amy Mayer
Abigail Cooper

SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
100 Pearl Street
Suite 20-100
New York, NY 10004-2616
(212) 336-1100
Email: [email protected]

Attorneys for the Plaintiff
Of Counsel
Kristin Pauley
Mark Sylvester

UNITED STATES DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK 
 
SECURITIES AND EXCHANGE 
COMMISSION, 
 
                                             Plaintiff, 
 
                        -against- 
 
CONSENSYS SOFTWARE INC. 
  
                                             Defendant. 
 
 

 
 
COMPLAINT 

   
24 Civ. 4578 (       ) 

 
   

JURY TRIAL DEMANDED 
  

           
          

 
Plaintiff Securities and Exchange Commission (“Commission” or “SEC”), for its Complaint 

against Defendant Consensys Software Inc. (“Consensys”), alleges as follows: 

SUMMARY 

1. Since 2016, Consensys has developed and operated a suite of crypto asset-related 

services under the brand “MetaMask.”  Consensys markets itself as a leader and innovator in the 

crypto asset industry, but certain products that Consensys offers its customers perform age-old 

functions:  (1) brokering securities transactions for retail investors and (2) engaging in the offer and 

sale of securities.   

2. Consensys violated the federal securities laws by failing to register as a broker and 

failing to register the offer and sale of certain securities, thereby depriving investors of crucial 

protections that those laws afford.  Since October 2020, Consensys has acted as an unregistered 

broker of crypto asset securities through its MetaMask Swaps service.  Since January 2023, 

Consensys has engaged in the unregistered offer and sale of securities in the form of crypto asset 

staking programs, and acted as an unregistered broker, through its MetaMask Staking service.  By its 

conduct as an unregistered broker, Consensys has collected over $250 million in fees.   

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3. MetaMask Swaps is a digital platform that brokers transactions in crypto asset 

securities on behalf of MetaMask Swaps users—including retail investors in crypto asset securities.  

As its name suggests, through “MetaMask Swaps,” Consensys effects the exchange of one crypto 

asset for another on the investor’s behalf.  Consensys solicits potential investors in crypto asset 

securities, holds itself out as a place to buy and sell crypto assets (which include crypto asset 

securities), recommends trades with—as Consensys itself puts it—the “best” value, accepts investor 

orders, routes investor orders, handles customers assets, carries out trading parameters and 

instructions on the customer’s behalf, and receives transaction-based compensation.   

4. MetaMask Swaps functions as follows.  An investor enters the name and amount of 

the crypto asset that they wish to sell, as well as the name of the crypto asset that they wish to buy in 

return.  MetaMask Swaps then pulls available rates for the requested exchange from a Consensys-

curated group of execution venues and other third-party liquidity providers (referred to herein as 

“third-party liquidity providers”) and displays those rates to the investor, highlighting the option that 

Consensys deems “best.”  With one additional click by the investor, MetaMask Swaps performs the 

functions necessary to effect the trade, on the investor’s behalf, with the third-party liquidity 

provider.  As described in further detail below, Consensys’s software routes the investor’s order by 

transferring their asset and trading instructions through Consensys’s own smart contracts on the 

blockchain, which interface with third-party liquidity providers on the investor’s behalf.  As is 

typically the case in traditional securities markets, the investor here never interacts directly with the 

third party; all investor interactions are directly with Consensys’s platform.  And Consensys collects 

a fee on most transactions. 

5. Since 2020, through MetaMask Swaps, Consensys has brokered over 36 million 

crypto asset transactions—including at least 5 million transactions in crypto asset securities—

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between investors, on one hand, and third-party liquidity providers (such as purportedly 

“decentralized” crypto asset trading platforms and market makers) on the other. 

6. In addition to operating as an unregistered broker with respect to MetaMask Swaps, 

Consensys performs another traditional function of the securities market: offering and selling 

securities.  Specifically, Consensys has offered and sold tens of thousands of securities for two 

issuers:  Lido and Rocket Pool.  By this conduct, Consensys acts as an underwriter of those 

securities and participates in the key points of their distribution. 

7. Lido and Rocket Pool each offer what are commonly referred to as “liquid staking” 

programs.  “Staking,” in the context of a blockchain network, refers to the commitment of the 

native crypto asset of the blockchain (in the case of the Ethereum blockchain, for example, ether or 

“ETH”) in order to act as a “validator” of transactions recorded on that network.  Blockchain 

validators perform certain functions to earn rewards in the form of additional tokens and, when 

selected, proposing new blocks to the blockchain.  Lido and Rocket Pool offer an investment 

program known as a “staking program,” centered around this feature of the Ethereum blockchain.  

In essence, Lido and Rocket Pool each pool ETH contributed by investors and stakes it on the 

blockchain, using their technological expertise to earn returns that the typical investor would not be 

able to earn on their own.  Upon receipt of an investor’s ETH, Lido and Rocket Pool issue the 

investor a new crypto asset in return—stETH or rETH, respectively—representing the investor’s 

pro-rata interest in the staking pool and its rewards.  Lido and Rocket Pool refer to their staking 

programs as “liquid” because investors’ interests in the programs—represented by the stETH and 

rETH tokens—are tradable on the secondary market, thereby providing investors a mechanism to 

exit their investment position, whereas tokens staked directly on the blockchain cannot be easily 

accessed while they are staked. 

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8. The Lido and Rocket Pool staking programs are each offered and sold as investment 

contracts and, therefore, securities.  Specifically, as described in more detail below, investors make 

an investment of ETH in a common enterprise with a reasonable expectation of profits from the 

managerial efforts of Lido and Rocket Pool, respectively.  Yet, neither Lido nor Rocket Pool has 

filed a registration statement with the Commission for the offer and sale of these investment 

contracts. 

9. Consensys, for its part, brokers and also offers and sells these securities in 

unregistered transactions through its “MetaMask Staking” platform.  By soliciting investors to 

participate in the Lido and Rocket Pool staking programs and by acting as an intermediary between 

Lido and Rocket Pool, on one hand, and investors in their respective staking programs on the other, 

Consensys was an integral part of the distribution of these securities.  Indeed, Consensys developed 

and deployed MetaMask Staking for the specific purpose of offering and selling the Lido and Rocket 

Pool staking program investment contracts.  Consensys solicits investments in the Lido and Rocket 

Pool staking programs through “MetaMask Staking.”  When an investor makes a request to invest 

with Lido or Rocket Pool via MetaMask Staking, Consensys transfers the ETH to Lido or Rocket 

Pool on the investor’s behalf and transfers newly issued stETH or rETH from Lido or Rocket Pool 

to the investor’s MetaMask Wallet (a Consensys-developed software application for storing 

investors’ crypto assets, as explained below).  MetaMask Staking investors never interact directly 

with Lido or Rocket Pool; all investor interactions are directly with Consensys’s platform. 

10. Despite performing brokerage functions, Consensys has not registered as a broker 

with the Commission, in violation of the federal securities laws.  As further explained below, those 

provisions mandate transparency, including the disclosure of conflicts of interest, so that investors 

receive information necessary to make informed investment decisions.  Registration also requires 

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broker-dealers to comply with applicable financial responsibility requirements that protect customers 

and other market participants.   

11. Consensys’s unregistered offer and sale of the Lido and Rocket Pool securities, as to 

which it also acts as an unregistered broker, violates the federal securities laws.  It deprives investors 

of the protections afforded to them by the federal securities laws.  Indeed, registration statements 

provide investors with material information about the securities offering and the issuer’s business 

and financial condition, so that investors can make informed investment decisions. 

12. With MetaMask Swaps and MetaMask Staking, Consensys has inserted itself into the 

U.S. securities markets, yet failed to act in accordance with the provisions of the federal securities 

laws to which it is subject and that exist to protect investors. 

VIOLATIONS 

13. By engaging in the conduct set forth in this Complaint, including the operation of its 

MetaMask Swaps and MetaMask Staking platforms, Consensys has acted as a broker, without 

registering as such, in violation of Section 15(a) of the Securities Exchange Act of 1934 (“Exchange 

Act”) [15 U.S.C. § 78o]. 

14. In addition, through the MetaMask Staking program, Consensys has engaged in 

unregistered offers and sales of securities in violation of Sections 5(a) and (c) of the Securities Act of 

1933 (“Securities Act”) [15 U.S.C. §§ 77e(a) and 77e(c)].  

15. Unless Defendant is restrained and enjoined, it will engage in the acts, practices, 

transactions, and courses of business set forth in this Complaint or in acts, practices, transactions, 

and courses of business of similar type and object. 

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NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 

16. The Commission brings this action pursuant to the authority conferred upon it by 

Securities Act Sections 20(b) and 20(d) [15 U.S.C. §§ 77t(b) and 77t(d)], and Exchange Act Section 

21(d) [15 U.S.C. § 78u(d)].  

17. The Commission seeks a final judgment: (a) permanently enjoining Defendant from 

violating the federal securities laws this Complaint alleges it has violated; (b) ordering Defendant to 

pay civil money penalties pursuant to Securities Act Section 20(d) [15 U.S.C. § 77t(d)] and Exchange 

Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)]; and (c) ordering any other and further relief, including 

equitable relief and other relief pursuant to Exchange Act Section 21(d) [15 U.S.C. § 78u(d)], the 

Court may deem just and proper.  

JURISDICTION AND VENUE 

18. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331, Sections 

20(b), 20(d), and 22 of  the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v], and Sections 21(d), 

21(e), and 27 of  the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa]. 

19. Defendant, directly and indirectly, has made use of the means or instrumentalities of 

interstate commerce or of the mails in connection with the transactions, acts, practices, and courses 

of business alleged herein. 

20. Venue lies in this District under Securities Act Section 22(a) [15 U.S.C. § 77v(a)] and 

Exchange Act Section 27 [15 U.S.C. § 78aa].  Defendants may be found in, are inhabitants of, or 

transact business in the Eastern District of  New York, and certain of  the acts, practices, 

transactions, and courses of  business alleged in this Complaint occurred within this District.  Prior 

to February 2024, Consensys was based in Brooklyn, New York, and still maintains offices in 

Brooklyn. 

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DEFENDANTS 

21. Consensys was founded in 2014.  In June 2020, Consensys was incorporated in 

Delaware. 

OTHER RELEVANT ENTITIES 

22. Lido Finance (“Lido”) is a Cayman Islands company.  Lido operates a program for 

staking on the Ethereum blockchain.  Lido launched its staking program in December 2020.  

23. Rocket Pool is headquartered in Australia.  Rocket Pool also operates a program for 

staking on the Ethereum blockchain.  Rocket Pool launched its staking program in October 2021. 

FACTS 

I. BACKGROUND 

A. Statutory and Legal Framework 

24. The Securities Act and the Exchange Act “form the backbone of American securities 

laws.”  Slack Tech., LLC v. Pirani, 598 U.S. 759, 762 (2023).  These acts define “security” broadly, to 

include a wide range of assets, including “investment contracts.”  [15 U.S.C. §§ 77b(a), 78c(a)(10)]. 

25. Investment contracts are instruments through which a person invests money in a 

common enterprise and reasonably expects profits derived from the entrepreneurial or managerial 

efforts of others.  

26. Congress defined “security” broadly to embody a “flexible rather than a static 

principle, one that is capable of adaptation to meet the countless and variable schemes devised by 

those who seek the use of the money of others on the promise of profits.”  SEC v. W.J. Howey Co., 

328 U.S. 293, 299 (1946). 

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i. Registration of Securities Offerings  

27. Congress enacted the Securities Act in part to regulate the offer and sale of securities. 

28. Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)] require 

registration of offers and sales of securities with the SEC. 

29. Registration is intended to assure that the persons offering or selling the securities 

give the investing public required information about the issuer, the securities, and the transaction.  

With that information, investors can then make more informed investment decisions. 

ii. Registration of Brokers 

30. Section 3(a)(4) of the Exchange Act [15 U.S.C. § 78c(a)(4)] defines “broker” 

generally as “any person engaged in the business of effecting transactions in securities for the 

account of others.” 

31. Section 15(a) of the Exchange Act [15 U.S.C. § 78c(a)(4)] generally requires brokers 

to register with the SEC, and a broker must also become a member of one or more “self-regulatory 

organizations” (“SROs”), which, in turn, require members to adhere to rules governing the SRO’s 

members’ activities. 

32. The regulatory regime applicable to brokers is a cornerstone of the federal securities 

laws and provides important safeguards to investors and market participants.  Registered brokers are 

subject to comprehensive regulation and rules that include recordkeeping and reporting obligations, 

SEC and SRO examinations, and general and specific requirements aimed at addressing certain 

conflicts of interest, among other things.  All of these rules and regulations are critical to the 

soundness of the national securities markets and to protecting investors in the public markets who 

interact with brokers and invest in securities. 

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B. Crypto Assets  

33. As used herein, the terms “crypto asset” or “token” generally refers to an asset 

issued and/or transferred using blockchain or distributed ledger technology, including assets 

referred to colloquially as “cryptocurrencies,” “virtual currencies,” and digital “coins.” 

34. A blockchain or distributed ledger is a database spread across a network of 

computers that records transactions in theoretically unchangeable, digitally recorded data packages, 

referred to as “blocks.”  These systems typically rely on cryptographic techniques to secure the 

recording of transactions. 

35. Crypto asset owners typically store the cryptographic key information that gives 

them control over their crypto assets on a piece of hardware or software called a “crypto asset 

wallet.”  Crypto asset wallets, among other functions, provide a user-friendly way to store and 

manage the “public keys” and the “private keys” associated with an investor’s crypto assets.  The 

public key is used to derive the user’s blockchain “address,” and it can be freely shared with others.  

The private key is roughly analogous to a password; its use confers the ability to transfer a crypto 

asset and transact using the user’s public blockchain address.  Whoever controls the private key 

controls the crypto asset(s) associated with that key.  

C. Consensys and MetaMask 

36. Under its “MetaMask” brand, Consensys provides investors with a variety of services 

related to crypto assets.   

37. MetaMask Wallet, which Consensys has offered since July 2016, is the foundational 

application for its MetaMask suite of products. 

38. MetaMask Wallet is a Consensys-developed and Consensys-maintained software 

program, downloaded to an investor’s device (in the form of a mobile app or a browser extension), 

that stores the public and private keys to a user’s crypto assets. 

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39. The blockchain address (i.e., a derivation of the public key) stored in the investor’s 

MetaMask Wallet is, in essence, the investor’s MetaMask “account.” 

40. Indeed, for each blockchain that a new investor selects to interact with, MetaMask 

Wallet generates a public and private key pair and derives a blockchain address from the public key.  

MetaMask Wallet refers to these blockchain addresses as the investor’s “Accounts.”  By default, 

MetaMask Wallet creates an Account labeled “Account 1” for each blockchain selected by the 

investor. 

41. If an investor already owns a crypto asset—and stores the keys to that asset outside 

MetaMask Wallet—the investor can import the public and private keys associated with that asset to 

a MetaMask Wallet using its “import” account function. 

42. An investor’s MetaMask Wallet blockchain address is also the address where crypto 

assets purchased and sold through other MetaMask services—such as MetaMask Swaps and 

MetaMask Staking—are received and sent. 

43. An investor can view a list of crypto assets held in the investor’s MetaMask accounts, 

the investor’s total holdings in each asset, and the aggregate value of the investor’s assets, through a 

feature Consensys calls MetaMask Portfolio Dashboard.  According to an article by Consensys on 

July 17, 2023, MetaMask Portfolio Dashboard acts as a “home base” for tracking, buying, selling, 

and staking crypto assets. 

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

44. Consensys has never registered with the Commission as a broker with respect to its 

brokerage activities on MetaMask Swaps (or on MetaMask Staking, see infra § VI), and no exemption 

or exception from registration applies.  Nonetheless, from at least October 2020 to the present, 

Consensys has acted as a broker of crypto asset securities that it makes available through its 

MetaMask Swaps platform. 

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45. MetaMask Swaps is a Consensys-developed and Consensys-maintained software tool 

that brokers trades in crypto assets on behalf of investors who use MetaMask.  As described below, 

Consensys solicits potential investors in crypto asset securities, holds itself out as a place to buy and 

sell crypto asset securities, provides pricing and other information relevant to the purchase and sale 

of crypto asset securities, advises investors by highlighting trades with the “best” value, accepts 

investor orders, routes investor orders—including by handling customers assets and carrying out 

trading parameters and instructions on the customer’s behalf, thereby facilitating execution—and 

receives transaction-based compensation. 

46. While Consensys has branded the transaction a “swap,” it is simply a trade, or 

exchange, of one crypto asset for another—a crypto asset that the investor wants to sell (“Crypto 

Asset A”); and a crypto asset that the investor wants to buy (“Crypto Asset B”). 

47. Specifically, if an investor holds Crypto Asset A in their MetaMask Wallet and wishes 

to trade it for Crypto Asset B, MetaMask Swaps will (1) find and display to the investor the “best” 

exchange rate; (2) route the investor’s order and transfer Crypto Asset A through Consensys’s smart 

contracts; (3) interface with a third-party liquidity provider that executes the investor’s order, thereby 

selling Crypto Asset A and acquiring Crypto Asset B on behalf of the investor; (4) divert a fee into a 

Consensys-controlled smart contract address; and (5) transfer Crypto Asset B into the investor’s 

MetaMask Wallet. 

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

48. On October 6, 2020, Consensys released MetaMask Swaps to the public. 

49. Since then, Consensys has advertised and promoted MetaMask Swaps on its 

MetaMask website, metamask.io, and social media such as X (formerly, Twitter) as a way for 

investors to participate in the markets for crypto assets, including crypto asset securities. 

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50. In its October 6, 2020, launch announcement, Consensys claimed that MetaMask 

Swaps “offers [investors] the best trading experience in Defi” (referring to so-called “decentralized 

finance”). 

51. More specifically, Consensys stated that the MetaMask Swaps platform offered 

investors the “best prices” and “deepest liquidity.”  

52. The announcement concluded:  “MetaMask enables more trades more efficiently by 

providing an optimized path for every trade.” 

53. Consensys conveyed similar promotional messages on its website, at least as of 

December 2023.   

54. Its website stated, “Find the best price every time.  Swaps ensures that you always 

have access to the largest selection of tokens and the most competitive prices.” 

55. Its website continued to explain that, as part of its efforts to “locate the best trade,” 

Consensys “sources the best prices and determines which liquidity source is the most gas efficient.”  

(“Gas” is the fee that investors pay to record a transaction on the Ethereum blockchain.  Gas fees 

are demand-based and increase as more users seek to use the platform.  The higher the gas price 

paid for the transaction, the faster the transaction is likely to be mined.  Gas is not refundable even 

if a transaction fails.) 

56. In a January 2022 blog post, Consensys touted MetaMask Swaps as “The Optimized 

DeFi Trading Experience” and argued that its methodology increased the likelihood of best 

execution. 

57. Consensys also maintains a social media accounts on X called “@MetaMask” and 

“@MetaMaskSupport” through which it has promoted MetaMask Swaps, apprised investors of new 

platform developments, and provided customer support. 

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58. For example, on December 21, 2022, Consensys posted on X, “We’ve expanded the 

Swaps experience,” including a link to a MetaMask news release on its website, which touted the 

expansion of the MetaMask Swaps platform capabilities to additional networks. 

59. In another December 21, 2022, post on X, Consensys targeted potential investors 

who may have been unfamiliar with MetaMask Swaps.  It stated, “Wait – what even is a Swap?!  We 

got you.  Learn all about MetaMask Swaps here.”  The accompanying image stated that MetaMask is 

“[t]he best way to swap your digital tokens” and “Effortless Crypto Swapping and Token Exchange 

on MetaMask.” 

60. Consensys posted another “news” release promoting MetaMask Swaps on its website 

on July 17, 2023.  In a section titled “Unrivaled convenience,” Consensys stated, “Swaps is 

undeniably convenient.  You never have to leave MetaMask to execute your transaction through our 

vetted group of providers.”  The release continued, “Swaps ensures you receive . . . the maximum 

value for your transaction.”  

61. On its MetaMask website and Consensys’s YouTube channel, Consensys has also 

published a video about its MetaMask Swaps service in which it casts MetaMask Swaps as, in 

essence, a broker of crypto assets for investors:  “Introducing MetaMask Swaps . . . The easiest way 

to trade Ethereum tokens right from inside your MetaMask Wallet.”  This video has been publicly 

available since March 2021. 

62. The video touts the user-friendly nature of the MetaMask Swaps platform and 

explains that “what makes the [MetaMask Swaps platform] so useful is what it’s doing behind the 

scenes.”   

63. The video narration states (referring to what in the crypto asset markets are called 

“decentralized exchanges” or “DEXs”) that MetaMask Swaps “compares various DEXs, 

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aggregators, and market makers to find you the best price, with the lowest network fees, and the 

least slippage.”  

64. The video also notes that MetaMask Swaps can split the investor’s trade up “among 

several providers to give [the investor] access to greater combined liquidity.” 

65. The video concludes that MetaMask Swaps does “all that, without you having to, 

well, think about it, really.” 

B. Consensys Effects Transactions for MetaMask Swaps Investors. 

66. Indeed, Consensys acts as a quintessential broker because it developed, deploys, and 

maintains MetaMask Swaps to, among other things, (1) interface with an investor to receive the 

investor’s trade request (i.e., the investor’s order); (2) seek out prices in the market; (3) identify the 

“best” one; (4) transfer the investor’s asset out of the investor’s possession; (5) effectuate the trade 

on the investor’s behalf; and (6) obtain transaction-based compensation for itself. 

67. From the investor’s perspective, the process is simple—requiring no more than a 

few clicks or taps on the screen. 

68. To use the MetaMask Swaps platform, the investor needs no technical or blockchain 

expertise.  

69. “Behind the scenes,” however, Consensys’s software engages in a series of 

technological tasks to intermediate the purchase and sale of crypto assets on behalf of investors who 

use MetaMask Swaps. 

70. The MetaMask Swaps User Guide (the “User Guide”) emphasizes the ease and 

simplicity of the investor experience as compared to the breadth of technological work Consensys 

has programmed its software to perform to broker the transactions for the benefit of the investors. 

71. In the “Preparing your Swap” section of the User Guide, Consensys explains:  

“There’s a lot going on behind the scenes while you’re watching Swaps search” for the best price.  

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“This process is the secret ingredient in making MetaMask Swaps the cheapest and best swapping 

service out there.” 

72. This User Guide section continues:  “Swaps is searching across decentralized token 

exchanges and token swapping protocols to find you the most advantageous exchange rate.  At the 

same time, it’s running test transactions, checking to make sure that if you do end up submitting a 

transaction, that it’s likely to go through—and if not, those options are filtered out.  MetaMask is 

saving users here from the pain of a failed transaction [including gas fees]. . . . Swaps failure rate is 

very low, and improvements are in the works to make it almost nonexistent.” 

73. The User Guide further explains that “Slippage,” explained below, “is yet another 

parameter that Swaps is using in your favor.” 

74. It says that the MetaMask software does the “DeFi number-crunching” for the 

investor. 

75. The “Executing your Swap” section of the User Guide further states:  “There’s a lot 

going on here [on the quote screen] but don’t be alarmed. . . . [MetaMask] Swaps is continuing to do 

all the work we mentioned previously on an ongoing basis, ensuring that you’re getting the most up-

to-date price and availability.” 

76. The User Guide also notes that, by interfacing with third-party platforms on your 

behalf, MetaMask Swaps “lessen[s] your exposure to potentially hackable or malicious smart 

contracts.” 

i. Consensys’s MetaMask Swaps Provides Pricing Information, Advises on the “Best” 
Trade, and Accepts Orders. 

77. Consensys designed MetaMask Swaps to provide investors with an intuitive and 

easy-to-use way to trade crypto assets, including crypto asset securities. 

78. To request a trade through MetaMask Swaps, the investor begins by clicking a button 

labelled “Swap” inside the MetaMask Wallet application. 

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79. Next, MetaMask Wallet presents investors with a screen on which they can select 

(from two drop-down menus) the asset they want to sell (i.e., one they currently hold in their wallet 

address, or “account,” for the relevant blockchain) and the asset they want to buy.  

80. As the below screenshot shows, investors also select the quantity of the currently 

held asset (Crypto Asset A) that they want to spend to acquire the new asset (Crypto Asset B). 

 

 

 

81. Under “advanced options,” the investor can adjust the “slippage tolerance.” 

82. In the words of Consensys’s MetaMask Swaps User Guide:  “Slippage is the amount 

of change between the price you click on and the final transaction price that MetaMask Swaps will 

tolerate. . . .  [MetaMask] Swaps allows a little bit of a difference between the price you agree on and 

the final price, to ensure your transaction goes through—but not too much, in order to protect you 

from sudden spikes or drops.”  (Setting a slippage tolerance effectively creates a “limit order,” which 

is an extremely common type of order offered by traditional brokers.) 

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83. The investor then clicks a button labelled “Get quotes,” at which point they are 

taken to another screen, on which MetaMask Swaps recommends the “best quote” or “best overall 

value” for the requested exchange. 

84. In the browser extension version of the software, MetaMask Swaps allows the 

investor to view a list of other options, with the recommended option at the top. 

85. For example, by clicking the “Best of 5 quotes” link on the left, MetaMask Swaps 

will display to the investor the screen on the right. 

  

 

 

86. In the browser extension, an investor is able to select an option other than the one 

Consensys deems the “best.” 

87. The mobile application, however, only permits the user to select the quote 

Consensys identifies as the “best.” 

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88. Consensys has designed its MetaMask software to display to the investors the “best” 

quote according to parameters Consensys has determined the software will use to calculate such a 

quote—such as likelihood of success (as described above) and transaction fees. 

89. Below are additional visualizations of the MetaMask Swaps investor interface, taken 

from the MetaMask Swaps website and the Consensys video demonstration of MetaMask Swaps, 

respectively:   

                                       
 

90. The investor can then click “Swap,” which causes MetaMask Swaps to attempt to 

effect the requested transaction on the investor’s behalf. 

91. If Consensys’s MetaMask software successfully effects the transaction, the investor 

sees a screen that says, “Transaction complete.” 

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92. To place an order through MetaMask Swaps, the investor does not need to know or 

enter their private key (the cryptographic “passcode” that is necessary to transfer Crypto Asset A out 

of their wallet). 

93. The investor does not even need to know or enter the entire public blockchain 

address for the asset they seek to sell.  Indeed, Consensys does not present this information to the 

investor by default. 

94. When placing orders through MetaMask Swaps, the investor never interfaces directly 

with any of the third-party liquidity providers. 

ii. Consensys Exercises Discretion In Providing Pricing Information and A Recommendation 
To The Investor. 

95. Indeed, Consensys does “do all the work” by employing its own market knowledge 

and exercising its own discretion when displaying pricing information and providing investment 

advice to the investor.  This type of market knowledge and discretion is employed by traditional 

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brokers in their business of effecting transactions in securities for the account of others, including 

through software programs they may develop. 

96. When the investor clicks the “Get quotes” button described above, Consensys has 

programmed its software to send a query to a Consensys “Token API” server, which pulls and 

aggregates pricing (i.e., exchange rate) information from certain third-party liquidity providers. 

97. More specifically, Consensys has chosen approximately 14 different external markets 

and market makers (the “third-party liquidity providers”) to make available crypto assets for buying 

and selling by investors, some of whom it has contracted with to integrate with the MetaMask Swaps 

product.   

98. Consensys has configured its software to interface directly with each of these third-

party liquidity providers. 

99. These third-party liquidity providers include crypto asset trading platforms and other 

private market makers. 

100. Consensys’s Token API Server pulls pricing information from these third-party 

liquidity providers and displays it to the investor on the quote screen (subject to the conditions 

described herein). 

101. Consensys’s software does not query all third-party liquidity providers; it only pulls 

pricing information from the approximately 14 providers that Consensys configured it to interface 

with, at least some of whom have contracted with Consensys and with whom Consensys may share 

a portion of the fees it charges investors. 

102. Therefore, the quotes displayed to investors on MetaMask Swaps are those sourced 

from third parties at Consensys’s discretion—specifically, this is how Consensys has programmed 

the MetaMask software to function.  In other words, Consensys is using its own market knowledge 

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just like brokers in the traditional securities markets do, to suggest to investors what Consensys 

considers the best execution venues for their customers. 

103. The crypto asset pairs available for “swapping”—i.e., trading—through MetaMask 

Swaps generally include whatever crypto asset pairs are available to trade via the third-party liquidity 

providers with whom Consensys has configured its software to interface, so long as those crypto 

assets are compatible with the blockchains known as Ethereum, Polygon, and BNB Smart Chain, as 

well as certain other specified blockchains. 

104. Consensys, however, exercises further discretion over which crypto assets it makes 

available to investors. 

105. Pursuant to a “Token Restriction Policy” adopted first in August 2021 and later 

amended throughout 2022, Consensys does not permit investors to trade in crypto assets that are 

“restricted assets,” as determined by Consensys.  In accordance with the token restriction policy, 

restricted assets include tokens that Consensys has determined: (1) appear to resemble other tokens 

and have a likelihood of creating investor confusion; (2) extract hidden fees; or (3) tokens that 

Consensys legal counsel have a very strong reason to believe might constitute regulated assets, such 

as securities or commodity derivatives, under U.S. law. 

106. So long as a token is not deemed “restricted” by Consensys, Consensys collects 

prices for the requested trade, runs test transactions, estimates gas fees, and, based on this 

information, and advises the investor of the “best.” 

iii. Consensys Effects Transactions on the Investor’s Behalf—Routing Investor Orders, 
Handling Investor Assets, and Taking A Fee. 

107. If the investor selects the “best price”—or any other price—displayed on the screen 

and clicks “Swap,” that signals Consensys’s software to proceed with submitting a blockchain 

transaction to a Consensys owned and operated node, routing the investor’s trade request (i.e., the 

investor’s order) and transferring the investor’s crypto asset to the third-party liquidity provider.  

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During this process, Consensys-developed and Consensys-deployed smart contracts handle the 

investor’s assets and carry out instructions in accordance with the investor’s order. 

108. Specifically, to route the investor’s order and exchange Crypto Asset A for Crypto 

Asset B on the investor’s behalf, Consensys has programmed its software—including its MetaMask 

Wallet software and other software (e.g., smart contracts) that it has deployed on Ethereum and 

other blockchains, interacting with each other and with other third-party software interfaces—to 

take the following steps: 

109. First, the Consensys software reads the investor’s private key from the MetaMask 

Wallet.  This is the digital password that cryptographically unlocks Crypto Asset A so that it can be 

transferred out of the investor’s MetaMask Wallet. 

110. Second, the Consensys software submits a blockchain transaction to a Consensys-

operated and controlled remote procedure call or “RPC” node.  The RPC node stores the 

blockchain transaction in a mempool (a collection of proposed transactions that are in a queue) until 

it is included in a block and executed, as per the steps below.  More specifically, the Consensys 

software creates, signs (using the investor’s private key), and submits this blockchain transaction to 

Consensys’s RPC node, which when executed will transfer the specified amount of Crypto Asset A 

from the investor’s wallet address to a Consensys-developed smart contract called “Spender.sol.”   

111. This Spender.sol smart contract has its own, separate public address on the 

Ethereum blockchain. 

112. Accordingly, the Consensys software transfers Crypto Asset A to Consensys’s 

Spender.sol smart contract’s blockchain address. 

113. The investor has no control over Consensys’s Spender.sol smart contract blockchain 

address. 

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114. Indeed, the investor does not have any control over Crypto Asset A once Consensys 

software transfers it out of the investor’s MetaMask Wallet. 

115. Consensys’s Spender.sol smart contract address temporarily holds the investor’s 

Crypto Asset A. 

116. Third, Consensys’s Spender.sol smart contract will interact with a number of 

Consensys-developed “Adapter” smart contracts. 

117. Because each third-party liquidity provider is different, Consensys has built unique 

“Adapter” contracts to allow its Spender.sol smart contract to interact with each of the 

approximately 14 unique third-party liquidity providers. 

118. Accordingly, for example, if the quote selected by the investor was offered on 

Liquidity Provider A, the Spender.sol smart contract would rely on Consensys’s Liquidity Provider A 

Adapter smart contract to interact with Liquidity Provider A or its liquidity pool (which refers to, in 

essence, a blockchain address into which crypto assets are deposited for buying and selling). 

119. Fourth, the corresponding Adapter smart contract facilitates the exchange with the 

third-party liquidity provider. 

120. Specifically, through the Adapter smart contract, the third-party liquidity provider 

will take Crypto Asset A from the Spender.sol smart contract address and place Crypto Asset B into 

the Spender.sol smart contract address. 

121. From the perspective of the third-party liquidity provider, Consensys’s “Spender.sol” 

smart contract is the counterparty to the trade. 

122. The third-party liquidity provider never interacts directly with the MetaMask Swaps 

investor or their wallet address. 

123. Fifth, the Consensys software transfers a fee—0.875% in most circumstances—from 

its Spender.sol contract to a “fees” smart contract blockchain address controlled by Consensys. 

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124. Sixth, the software transfers the remainder of Crypto Asset B from Consensys’s 

Spender.sol contract to the investor’s wallet address. 

125. When using the MetaMask Swaps platform to request a trade, the investor does 

not—indeed, cannot—interface directly with the third-party liquidity provider; rather, Consensys 

effects the trade through software that it has programmed, including (a) MetaMask Wallet, 

(b) blockchain-based smart contracts, and (c) “Adapter” smart contracts that interface with third-

party software applications. 

126. As explained by the MetaMask Swaps User Guide:  “[MetaMask] Swaps enables you 

to trade tokens on any Ethereum-compatible network . . . without having to interface directly 

with third-party platforms.”  (Emphasis added.) 

127. Consensys acts as a broker and, through software it has written, performs each step 

necessary to intermediate the transaction between the investor and the third-party liquidity provider. 

128. Consensys, through the MetaMask Swaps platform, has effected over 36 million 

crypto asset transactions on behalf of investors and collected fees worth over $250 million. 

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

 
129. Since approximately October 2020, Consensys—through the MetaMask Swaps 

platform—has effected transactions in various crypto assets that are being offered and sold as 

investment contracts, and thus securities, for the accounts of investors.  This includes, but is not 

limited to, the units of each of the crypto asset securities described below—with trading symbols 

MATIC, MANA, CHZ, SAND, and LUNA—(the “Crypto Asset Securities”). 

130. The crypto assets on the MetaMask Swaps platform, including but not limited to 

each of the Crypto Asset Securities to the extent Consensys continues to make them available today, 

can be bought, sold, or traded for consideration, including other crypto assets. 

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131. Each unit of a particular crypto asset on the MetaMask Swaps platform, including 

but not limited to each of the Crypto Asset Securities, trades at the same price as another unit of 

that same asset. 

132. These assets, including but not limited to each of the Crypto Asset Securities, are 

interchangeable (e.g., any MATIC or fraction thereof is just like any other).  Accordingly, to the 

extent the assets change in price, all tokens of the same asset increase or decrease in price in the 

same amounts and to the same extent, such that one token is equal in value to any other one token, 

on a pro rata basis. 

133. The purchase of any particular asset, including but not limited to each of the Crypto 

Asset Securities, does not appear to give an investor any special rights not available to any other 

investor in that asset, such as separately managed accounts, or different capital appreciation as to the 

value of the crypto assets that other investors in the same assets hold. 

134. The crypto assets on the MetaMask Swaps platform, including but not limited to 

each of the Crypto Asset Securities, are available for sale broadly to any person who creates an 

account with MetaMask Swaps, and a MetaMask website displays information (like asset price 

changes) in a format highly similar to that offered by registered broker-dealers in the traditional 

securities markets, who permit investors to transact in securities.  Consensys makes these crypto 

assets available for trading without restricting transactions to those who might acquire or treat the 

asset as anything other than as an investment. 

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135. For example, the below page on MetaMask Portfolio’s website provides price 

movement and other information for MATIC:  

              

  

136. Investors can access the page for MATIC and other asset-specific pages from the 

“Tokens” page on MetaMask Portfolio’s website; they simply search for a particular crypto asset and 

are redirected to a page where Consensys provides additional information about that crypto asset.  

The information on each asset-specific page includes, but is not limited to: (i) market cap; (ii) the 24-

hour total volume for the crypto asset; (iii) circulating supply; (iv) historical information about the 

“price” of the asset including its “all-time high” price and the option to view the asset’s price history 

over the last day, week, month and year including as a percentage return on investment; and (v) the 

opportunity to trade the asset using MetaMask Swaps.  Consensys states that it uses information 

gathered from third-party sources as the basis for the asset-specific information displayed on 

MetaMask Portfolio.  Because Consensys has not registered as a broker, there is no formal 

mechanism to ensure the accuracy or consistency of the information Consensys discloses about the 

crypto assets it makes available for sale, including each of the Crypto Asset Securities. 

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137. Consensys does not restrict how many units of a crypto asset, including but not 

limited to each of the Crypto Asset Securities, any given investor may purchase.  Moreover, 

investors are not required to purchase quantities tied to a purported non-investment “use” that may 

exist for the asset, if any.  To the contrary, investors may and typically do purchase these assets in 

any amount. 

138. The assets available for sale on the MetaMask Swaps platform, including but not 

limited to each of the Crypto Asset Securities, are transferable and immediately eligible for resale on 

the MetaMask Swaps platform, or other crypto asset trading platforms without any apparent 

restrictions on resale (including as to the prices or amounts of resale, or the identity of the new 

buyers).  

139.  Consensys has brokered crypto assets that have been the subject of prior SEC 

enforcement actions based upon their status as crypto asset securities.  Those crypto assets include 

but are not limited to the following assets for which Consensys has offered brokerage services:  

AMP (the AMP token, available through MetaMask Swaps since October 2020), AXS (Axie Infinity 

Shards, available since November 2020), BNB (a token of the Binance blockchain, available since 

March 2021), CHZ (discussed below), COTI (the COTI token, available since October 2020), DDX 

(the DerivaDAO token, available since December 2020), FLOW (the FLOW token, available since 

November 2020), HEX (the HEX token, available since October 2020), LCX (the LCX token, 

available since October 2020), MANA (discussed below), MATIC (discussed below), NEXO (the 

NEXO platform token, available since October 2020), OMG (the OMG Network token, available 

since October 2020), POWR (the Powerledger token, available since October 2020), SAND 

(discussed below), LUNA (discussed below), RLY (the Rally token, available since October 2020), 

XYO (the XYO token, available since October 2020). 

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140. Set forth below are additional details regarding a non-exhaustive list of five Crypto 

Asset Securities in which Consensys, through its MetaMask Swaps platform, effected transactions 

for the accounts of investors. 

141. From the time of their first offer or sale, each of these Crypto Asset Securities was 

offered and sold, and continued to be offered and sold on Conensys’s platform, as an investment 

contract and thus a security.  For each of the Crypto Asset Securities, statements by the crypto asset 

issuers and promoters have led investors reasonably to expect profits based on the managerial or 

entrepreneurial efforts of such issuers and promoters (and associated third persons).  This was 

investors’ reasonable expectation whether they acquired the Crypto Asset Securities in their initial 

offering, from prior investors, or through crypto asset brokerage platforms including the MetaMask 

Swaps platform.   For each of the Crypto Asset Securities, such statements by issuers and promoters 

include statements made and/or available to the investing public during the period when those 

Crypto Asset Securities were available for trading through the MetaMask Swaps platform, as well as 

other statements described below. 

A. MATIC 

142. “MATIC” is the native token of the Polygon blockchain.  Polygon, originally called 

the Matic Network and rebranded as Polygon in 2021, is a blockchain platform created in 2017 in 

Mumbai, India by, among others, Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun.  Since its 

creation, Polygon’s founders have remained actively involved with Polygon through “Polygon Labs” 

(“Polygon”), an entity they also founded for “the development and growth of Polygon.” 

143.  According to the Polygon website, https://polygon.technology/, the Polygon 

network is an Ethereum scaling platform that enables developers to build scalable user-friendly 

dApps with low transaction fees, purportedly by hosting “sidechains” that run alongside the 

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Ethereum blockchain, and allows users to process transactions and initiate the transfer of assets and 

technology development on Polygon’s supposedly less congested sidechain network. 

144. Polygon issued a fixed supply of 10 billion MATIC tokens.  MATIC holders can earn 

additional MATIC for staking their MATIC on the Polygon platform and becoming a validator, 

from delegating their MATIC to other validators in return for a portion of the fees collected from 

validating transactions, or from staking their MATIC with other third parties, such as crypto asset 

platforms that offer staking services. 

145. According to the initial whitepaper for MATIC, “Matic Tokens [we]re expected to 

provide the economic incentives … on the Matic Network [now Polygon] … [W]ithout the Matic 

Token, there would be no incentive for users to expend resources to participate in activities or 

provide services for the benefit of the entire ecosystem on the Matic Network.” 

146. In or around 2018, Polygon sold approximately 4 percent of the total supply of 

MATIC in two early rounds of sales raising $165,000 at a price of $0.00079 USD per 1 MATIC and 

$450,000 at a price of $0.00263 USD per 1 MATIC.  In April 2019, Polygon sold another 19% of 

the total supply of MATIC to the public through a so-called “initial exchange offering” (or “IEO”—

essentially, an initial offer and sale of a crypto asset security on a crypto trading platform) on the 

Binance.com crypto asset trading platform at a price of $0.00263 USD per 1 MATIC, raising an 

additional $5 million to fund development of the network. 

147. From the time of its offering, MATIC was offered and sold as an investment 

contract and therefore a security. 

148. The price of all MATIC tokens goes up or down together. 

149. MATIC has been available for buying and selling through the brokerage services 

offered by MetaMask Swaps since at least July 2021. 

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150. The information Polygon publicly disseminated would lead a reasonable investor, 

including those who purchased MATIC since October 2020, to view MATIC as an investment.  

Specifically, MATIC holders would reasonably expect to profit from Polygon’s efforts to grow the 

Polygon protocol because this growth would in turn increase the demand for and the value of 

MATIC. 

151. For example, Polygon stated publicly, including in the whitepaper, that it would pool 

investment proceeds through its private and public fundraising to develop and grow its business. 

152. Following the IEO, moreover, Polygon engaged in additional MATIC sales, stating 

publicly that it was doing so in order to raise the funds needed to support the growth of its network.  

On February 7, 2022, Polygon reported on its blog that it raised about $450 million through a 

purportedly private sale of its native MATIC token in a funding round to several prominent venture 

capital firms.  Polygon reported, “[w]ith this warchest, the core team can secure Polygon’s lead in 

paving the way for mass adoption of Web3 applications, a race that we believe will result in 

Ethereum prevailing over alternative blockchains.” 

153. Polygon has also reported fundraising from other marquee and celebrity investors. 

154. Polygon also stated that it would reserve roughly 67% of MATIC to support the 

Polygon ecosystem, the Foundation, and network operations.  Another 20% of MATIC was further 

reserved to compensate the Polygon team members and advisors, aligning their fortunes with 

investors’ with respect to MATIC. 

155. In addition, the Polygon blog provides frequent updates on network growth and 

developments at Polygon, including, prior to December 2022, weekly statistics on active wallets and 

transactions per day, as well as financial metrics such as revenue per day and total network revenue. 

156. Polygon has also routinely announced when crypto asset trading platforms have 

made MATIC available for trading. 

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157. Polygon has explicitly encouraged MATIC purchasers to view MATIC as an 

investment in other ways.  For example, in a February 5, 2021 tweet, 14 months after MATIC’s 

single biggest price drop, Nailwal compared the token to a prize fighter that came back from defeat 

to become a champion:  

 

 

 

 

 

 

158. Also, on November 3, 2022, Nailwal stated on Twitter: “I will not rest till 

@0xPolygon gets its well-deserved ‘Top 3’ spot alongside BTC & ETH. No other project comes 

even close.”  In a May 24, 2022 “Fireside Chat” with CNBC posted on YouTube, Bejelic described 

part of “what’s different about Polygon” as: “[w]e are as a team very, very committed, we have a 

very hands on approach with all the projects out there, we are working around the clock on 

adoption and that is why we are currently the most adopted scaling infrastructure platform.”  Into 

2023, the founders of Polygon continued to promote the platform through various social media.  

For example, on February 21, 2023, Nailwal tweeted, and Kanani retweeted, “Polygon has grown 

exponentially.  To continue on this path of stupendous growth we have crystallized our strategy for 

the next 5 yrs to drive mass adoption of web3 by scaling Ethereum.  Our treasury remains healthy 

with a balance of over $250 million and over 1.9 billion MATIC.” 

159. Since January 2022, Polygon has also marketed that it “burns” MATIC tokens 

accumulated as fees, indicating that the total supply of MATIC would decrease.  For example, in 

January 2022, Polygon emphatically announced a protocol upgrade that enabled burning in a blog 

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post titled, “Burn, MATIC, Burn!”  As Polygon explained in another blog post on its website around 

the same time, “Polygon’s MATIC has a fixed supply of 10 billion, so any reduction in the number 

of available tokens will have a deflationary effect.”  As of March 28, 2023, Polygon had burned 

approximately 9.6 million MATIC tokens.  This marketed burning of MATIC as part of the 

Polygon’s network’s “deflationary effect” has led investors reasonably to view their purchase of 

MATIC as having the potential for profit to the extent there is a built-in mechanism to decrease the 

supply and therefore increase the price of MATIC. 

160. In another white paper, Nailwal and others recently announced a revised Polygon 

protocol where a new token, POL, would succeed MATIC “as the native token of the Polygon 

ecosystem.”  The white paper states that:  “As the successor of MATIC, POL is envisioned to 

become an instrumental tool for coordination and growth of the Polygon ecosystem and the main 

driver of the vision of Polygon as the Value Layer for the Internet.” 

161. The whitepaper lays out a model “to simulate important performance indicators of 

the POL-powered ecosystem.”  The model estimates a $5 average POL price during the proposed 

10-year period, a significant increase from the current price of MATIC. 

B. MANA 

162.  “MANA” is the digital token minted by Decentraland.  Decentraland is a virtual 

reality platform that began development in June 2015 but was not made available to the public until 

its launch in February 2020.  Decentraland was launched through an entity named Metaverse 

Holdings by a team of core individual developers: Ariel Meilich, Esteban Ordano, Manual Araoz, 

and Yemel Jardi.  Decentraland operates on the Ethereum blockchain.  According to Decentraland’s 

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website, www.decentraland.org, Decentraland is a three-dimensional virtual reality platform, where 

users can create, experience, and monetize their content and applications. 

163. According to Decentraland’s website, MANA serves as the crypto asset involved in 

all transactions in the Decentraland virtual reality ecosystem.  On August 18, 2017, Decentraland 

held an initial coin offering in which MANA tokens were exchanged for ETH tokens, raising 

approximately $24.1 million.  Currently, there is a total supply of approximately 2.19 billion MANA 

tokens. 

164. Decentraland offered early contributors to the Decentraland ecosystem a discounted 

price when purchasing MANA. 

165. From the time of its offering, MANA was offered and sold as an investment 

contract and therefore a security. 

166. The price of all MANA tokens goes up or down together. 

167. MANA has been available for buying and selling through MetaMask Swaps since at 

least October 2020. 

168. The information Decentraland publicly disseminated would lead a reasonable 

investor, including those who have purchased MANA since October 2020, to view MANA as an 

investment.  Specifically, MANA holders would reasonably expect to profit from Decentraland’s 

efforts to grow the Decentraland protocol because this growth would in turn increase the demand 

for and value of MANA. 

169. Investor proceeds raised during the MANA ICO were pooled to fund the marketing, 

business expenses, and completion of the Decentraland platform.  For instance, on July 5, 2017—a 

few weeks before the MANA ICO—Jardi published a blog post detailing Decentraland’s intended 

use of revenue from the token sale as follows: 

 

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public; and 20 percent reserved to “incentivize early users, developers, and partners who want to 

build within Decentraland.” 

173. As Meilich explained in his public blog post, “To incentivize value creation within 

Decentraland, extra tokens will be allocated to the [development team], organization, and a reserve 

to accelerate Community and Partner engagement.” 

174. For example, Decentraland publicly issued a whitepaper (“Decentraland 

Whitepaper”) describing the architecture that would be built in the virtual reality platform and steps 

that would be taken to support Decentraland’s growth.  It further made clear that the development 

of the platform was only beginning, and listed a number of “Challenges” that would need to be 

addressed in the development process in order for the platform to succeed. 

175. Decentraland has continued to invest efforts in new developments and tools for the 

platform.  According to Melich, even after the ICO, Decentraland was still “preparing a land 

allocation policy to ensure fair distribution, as well as a method for groups to purchase larger 

contiguous plots of land.”  Since the ICO, Decentraland has developed tools for purported use on 

its platform (e.g., the “Marketplace” and “Builder” tools).  In a public blog post published on March 

19, 2018, the Decentraland team described the marketplace tool as the “first … in what will be a 

series of tools.” 

176. Additionally, the Decentraland Whitepaper explained how the Foundation would 

“Foster[] the Network” in that it will “hold contests to create art, games, applications, and 

experiences, with prizes contingent on meeting a set of milestones.  At the same time, new users will 

be assigned allowances, allowing them to participate in the economy immediately.”  The 

Decentraland Whitepaper further claimed, “These financial incentives will help bootstrap the utility 

value of the network until it independently attracts users and developers.” 

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177. The Decentraland Whitepaper and website have also marketed that the protocol 

“burns” (or destroys) MANA tokens when used within the Decentraland ecosystem. 

178. The Decentraland Whitepaper is still available on the Decentraland website. 

C. CHZ 

179. CHZ is a token on the Ethereum blockchain, advertised as the “native digital token 

for the Chiliz sports & entertainment ecosystem currently powering Socios.com,” a sports fan 

engagement platform built on the Chiliz blockchain.  The Chiliz blockchain was introduced in early 

2018 by protocol founder and current CEO Alexandre Dreyfus, under a Maltese entity named HX 

Entertainment Ltd.  The Chiliz whitepaper describes the Chiliz protocol as “a platform where fans 

get a direct Vote in their favorite sports organizations, connect and help fund new sports and 

esports entities.” 

180. The CHZ token purportedly allows “fans to acquire branded Fan Tokens from any 

team or organization partnered with the Socios.com platform and enact their voting rights as their 

fan influencers.”  Examples of voting polls that allow holders of “Fan Tokens” (purchased with 

CHZ tokens) to influence team decisions with their vote include selecting player warm-up apparel 

and choosing team pennant designs. 

181. According to the Chiliz whitepaper dated November 2018, during the second quarter 

of 2018 the Chiliz team completed fund-raising of approximately $66 million in exchange for 

approximately 3 billion CHZ in “Chiliz’s Token Generation Event” purportedly “executed via 

private placement.”  CHZ were originally minted in 2018, and there is a maximum supply of 

8,888,888,888 CHZ tokens.  However, it was not until the second quarter of 2019 that Chiliz made 

“Fan Tokens” on Socios.com available for purchase with CHZ. 

182. CHZ has been available for buying and selling through the MetaMask Swaps 

platform since at least December 2020. 

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183. From the initial “private” offering of CHZ tokens in 2018, through public 

statements made in 2023, the Chiliz team has disseminated information and made statements, 

including statements made and available during the period when CHZ was available to trade on 

MetaMask Swaps, that have led CHZ holders reasonably to view CHZ as an investment in and to 

expect profits from the team’s efforts to develop, expand, and grow the platform, which, in turn, 

would increase the demand for and the value of CHZ. 

184. For example, the Chiliz website, www.chiliz.com, introduces the Chiliz team, which 

is “comprised of nearly 350+ cross-industry professionals across 27 different nationalities and is 

constantly growing.”  The Chiliz team operates both the Chiliz protocol and Socios.com. 

185. In fact, the whitepaper and other public statements by Chiliz also identify several 

members of the Chiliz leadership team, the bios of these “Leadership” or “Advisory” teams, and 

their past entrepreneurial and technology experiences and successes.  The Chiliz website touts that 

the Chiliz team is “building the web3 infrastructure for sports and entertainment.” 

186. The Chiliz team also stated publicly that it would use the proceeds from CHZ sales 

to fund the development, marketing, business operations, and growth of the Chiliz protocol and, 

consequently, to increase the demand for CHZ in connection with the protocol.  For example, the 

whitepaper explains that funding raised through token sales would be allocated as follows: 58% to 

Operational Expenses (“A majority of funds will be passed on from the Issuer to an affiliate to 

develop the Socios.com platform, secure partnerships & realize the platform’s digital 

infrastructure.”); 20% to User Acquisition (“Funds will be used to acquire new users for the 

Socios.com platform and grow engagement in its voting utilities.”); 10% to Corporate Structuring; 

5% to Security and Legal; and 7% to Ecosystem Support. 

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187. Moreover, 5% and 3% of the total CHZ tokens distributed were allocated to the 

Chiliz team and an advisory board, respectively—the two groups responsible for the creation and 

development of the platform—aligning the fortunes of management with those of CHZ investors. 

188. The CHZ whitepaper further makes evident the mutuality of interest (and the 

alignment of fortunes) between promoter and investor when it cautions that “if the value of BTC, 

ETH and/or Chiliz fluctuates, the Company may not be able to fund development to the extent 

necessary, or may not be able to develop or maintain the Socios.com Platform in the manner that it 

intended.” 

189. The Chiliz team also frequently touts the growth potential in the sports and esports 

industry that it seeks to monetize through the Chiliz team’s efforts to expand its platform.  For 

example, the CHZ whitepaper highlighted the size of the gaming industry and potential for esports 

revenue as well as the use of CHZ to drive and monetize fan engagement for traditional sports.  In 

reference to the June 2018 “Token Generation Event,” the whitepaper stated:  “[w]e are no longer 

pursuing fundraising measures, instead focusing our efforts on leveraging accrued resources to 

realize the Chiliz/Socios.com vision.”  The whitepaper continued:  “[w]ith foundations set, Chiliz 

and the Socios.com platform it powers will look to use Football as a benchmark to expand our 

Tokenized Fan Voting model to other sports in order to cater to a global marketplace where 

different competitive verticals are dominant – prime examples of diversification are Cricket in the 

Indian market, Baseball for Japan, and the like.”  

190. Public statements that the Chiliz team and its executives made indicate that CHZ 

tokens are primarily deployed for purchasing “Fan Tokens” on Socios.com and that the demand for 

and price of CHZ tokens is directly reliant on demand for Socios fan tokens and their benefits.  

191. The Chiliz team also made other public statements that emphasize the economic 

reality inherent in the design of the Chiliz blockchain’s reliance on CHZ to function—that as Chiliz 

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is able to grow its platform by partnering with more teams, and those teams grant attractive 

opportunities to token holders, the value of the respective “Fan Tokens” will increase, and in turn, 

the value of CHZ will also increase. 

192. For instance, the FAQ section located on the Chiliz website, which was publicly 

available from at least December 2021 to December 2022, provided:  “Demand for the Chiliz token 

will increase as more esports teams, leagues and game titles are added to the platform, and as more 

fans want voting rights.”  

193. Chiliz’ CEO has echoed this same sentiment in other public statements.  In February 

2020, he stated:  “Tens of thousands of regular football fans have already started to use crypto, 

purchasing $CHZ in order to buy Fan Tokens, and in time we expect millions more to do so as we 

continue to add more partners to the platform and increase our reach and grow the brand.”  In 

March 2021, he tweeted:  “Monthly Active Users (MAU) of the @socios app, powered by $CHZ.  

You can see how the demand for $CHZ (exchanges, Etherscan wallets, …) exploded.  Everything is 

correlated.  We are building a mainstream consumer-facing product, powered by @chiliz 

blockchain.”  And in February 2023, he tweeted:  “I’m biased but I’m very confident that the Chiliz 

ecosystem is gonna bring a lot of value to fans, sports properties, and innovation in general.  Long 

journey ahead of us. $CHZ.” 

194. The Chiliz team has also made efforts to drive secondary trading of CHZ by offering 

the token on crypto asset trading platforms.  For example, an earlier version of the whitepaper 

highlighted “ongoing discussions” to offer CHZ on trading platforms across Asia, and the Chiliz 

website features a “Listing Content and Q&A” document reflecting a proposal to offer CHZ on the 

Binance DEX platform.  

195. The Chiliz team also tells investors that it plans to engage in “burning” (or 

destroying) CHZ tokens as a mechanism to support the price of CHZ by reducing their total supply.  

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For instance, in 2020, the Chiliz team announced through its Fan Token exchange that it would 

burn 20% received in net trading fees, 10% of proceeds from “Fan Token” offering sales, and 20% 

of net proceeds of NFT & Collectibles.  As with other crypto asset securities set forth herein, this 

marketed burning of CHZ has led investors reasonably to view their purchase of CHZ as having the 

potential for profit. 

D. SAND  

196.  “SAND” was created on the Ethereum blockchain as the native token of the 

Sandbox platform, a virtual gaming platform first released in 2012 by Pixowl, Inc. (“Pixowl”) as a 

game for download on mobile phones.  Pixowl, which is headquartered in San Francisco, was 

founded in 2011 by Arthur Madrid (“Madrid”) and Sebastien Borget (“Borget”).  In 2018, Animoca 

Brands, Inc. (“Animoca”), headquartered in Hong Kong, acquired Pixowl and announced its 

intention to build a new 3D version of the Sandbox by leveraging blockchain technology.  After 

Pixowl’s acquisition, the Sandbox’s intellectual property, along with the rest of Pixowl’s assets, were 

transferred to TSB Gaming Ltd (“TSB”), a wholly owned subsidiary of Animoca.  Madrid is CEO of 

TSB, and Borget is the COO. 

197. According to Sandbox’s website, SAND is required to access the Sandbox platform, 

participate in the platform’s governance, and earn rewards through the staking program on the 

platform. 

198. On or about May 23, 2019, before the minting of SAND in July 2019, Animoca 

raised approximately $2.5 million in cash and crypto assets through TSB via the issuance of Simple 

Agreements for Future Equity (“SAFEs”) and SAND tokens, to “fund the development of the 

upcoming blockchain version of The Sandbox.”  According to Animoca’s May 23, 2019 press 

release, the majority of investors allocated their investment to the purchase of both SAND tokens 

and future equity in TSB via the SAFE agreements (in the amount of $2 million), while some 

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investors allocated their investment exclusively to the purchase of SAND tokens ($500,000).  Per the 

release, the funding round was led by Hashed, for approximately $1 million, and also included a 

number of other crypto venture capital investors. 

199. TSB then minted a total supply of 3 billion SAND on the Ethereum blockchain in or 

around July 2019 and offered and sold SAND through purportedly private sales and in an IEO that 

raised $3 million on the Binance.com crypto asset trading platform starting August 13, 2020. 

200. SAND has been available for buying and selling through the MetaMask Swaps 

platform since approximately October 2020. 

201. The information TSB publicly disseminated has led SAND holders, including those 

who have purchased SAND since May 2022, reasonably to view SAND as an investment in and to 

expect to profit from TSB’s efforts to grow the Sandbox protocol, which, in turn, would increase 

the demand for and the value of SAND. 

202. On its blog posts announcing “exchange listings,” Sandbox touted its efforts to 

obtain “listings” and the SAND token’s liquidity in the secondary market. For example, in a 

September 21, 2021, Medium blog post, Sandbox stated that “$SAND is listed on over 60 global 

cryptocurrency exchanges, including a dozen of the top exchanges by market capitalization.” 

203. In addition, the Sandbox stated that it would pool the proceeds from the private 

token sales and the IEO to develop and promote use of the platform. For example, the May 23, 

2019, press release stated: “[t]he funds raised through this transaction will be used to grow the 

development team and infrastructure for the [Sandbox] Game Platform, support marketing efforts 

through the acquisition of creators and IP licenses, and provide for security, legal, and compliance 

expenses as well as general and administrative costs.”  The Sandbox whitepaper similarly described 

identical uses for the $3 million in funds intended to be raised during the IEO. 

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204. Moreover, according to the Sandbox whitepaper, of the 3 billion SAND tokens that 

were initially minted, 19% were to be allocated to the Sandbox founders and team, and another 

25.8% were to be allocated to the Company Reserve. 

205. In addition, the Sandbox’s Medium blog post on July 25, 2019, stated that “an 

interesting feature of [the $SAND] token is that it can accrue in value over time, due to the fact that 

it is scarce.  There will be a limited supply of 3 billion units of $SAND available.” 

206. Moreover, TSB stated publicly that it would take steps to manage the market for 

SAND, including the SAND whitepaper stating that the Sandbox team controls the supply of 

SAND tokens and has implemented a “controllable supply mechanism, such as purchasing SAND 

from multiple exchanges,” and that “while the total supply of SAND is fixed, the initial amount of 

SAND offered will provide a scarcity effect reducing the SAND available per capita and therefore 

fostering demand.” 

207. Additionally, in many instances, Animoca has touted the backgrounds of Pixowl, 

TSB, and the Sandbox core members, including Madrid and Borget, in describing the success and 

future development of the Sandbox: 

• After the acquisition of Pixowl, Yat Siu, the co-founder and director of Animoca, 
stated in a press release, dated August 27, 2018 (the “2018 Press Release”) that 
“Pixowl’s experienced developers will significantly increase our development 
capabilities. Its founders are highly respected game industry veterans who have 
developed multimillion dollar franchises. We believe the blockchain version of 
The Sandbox has incredible potential … We look forward to utilising the many 
opportunities for growth conferred by this acquisition.” 
 

• In the 2018 Press Release, Madrid also commented: ‘“Animoca Brands is a 
perfect fit for Pixowl and we are happy to add our brand relationships to its 
portfolio while accelerating growth for our key IP, The Sandbox …” 

 
• The 2018 Press Release also touted that “Ed Fries, the creator of Microsoft 

Game Studios and co-founder of the Xbox project, is a special advisor to The 
Sandbox’s original game developer Pixowl” and will therefore continue to serve 
on the advisory team. 

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• The Sandbox whitepaper further provided: “We have a strong product roadmap 

ahead and a top team to execute a strong vision to build a unique virtual world 
gaming platform where players can build, own, and monetize their gaming 
experiences and spread the power of blockchain as the lead technology in the 
gaming industry.” 
 

208. Moreover, the Sandbox whitepaper describes that the role of the “Sandbox 

Foundation” is to support the ecosystem of the Sandbox by, among other things, offering grants to 

incentivize high quality content and game production on the platform and further notes that the 

“overall valuation of the metaverse grows through the valuation of all games funded by the 

Foundation, creating a virtuous circle to enable funding bigger games.”  The Sandbox’s Gitbook also 

notes that the Sandbox Foundation has, among other things, (a) supported play-to-earn tournaments 

and cross-gaming to encourage the broader adoption of SAND and (b) supported marketing 

activities contributing to the growth of awareness about NFTs, Metaverse and SAND adoption, 

including co-marketing with exchanges and influencers. 

 E. LUNA 

209. LUNA was a token native to the Terra blockchain, created by Terraform and its 

founder, Do Kwon.  The Terra blockchain was launched in April 2019 along with the creation of 

one billion LUNA tokens.  

210. At all relevant times, Terraform and Kwon retained hundreds of millions of LUNA 

tokens for themselves. 

211. At least one “bridge,” called “Shuttle,” allowed LUNA holders to create “wrapped” 

versions of LUNA (“wLUNA”).  The wLUNA tokens were identical in all material respects to 

LUNA, except that they could be traded on the Ethereum blockchain, as opposed to the Terra 

blockchain. 

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212. From the time of their offerings through at least May 2022, LUNA and wLUNA 

were offered and sold as investment contracts and therefore securities. 

213. Investors tendered fiat currency and/or crypto assets to obtain LUNA and wLUNA. 

214. Each unit of LUNA was fungible with and was indistinguishable from any other unit 

of LUNA.  Each unit of wLUNA was fungible with and was indistinguishable from any other unit 

of wLUNA.  LUNA and wLUNA prices were the same, and they were exchangeable with each 

other on a one-to-one basis.  Any holder of wLUNA had the right and ability at any time to 

exchange the wLUNA for LUNA.   

215. Thus, investors in LUNA and wLUNA shared equally in price increases and 

decreases, such that if one investor profited, all investors did so as well in equal proportion to their 

total LUNA or wLUNA holdings. 

216. LUNA or wLUNA was first made available for trading through MetaMask Swaps in 

January 2021. 

217. The repeated drumbeat of information Terraform publicly disseminated about 

LUNA or wLUNA and Terraform’s plans to undertake efforts to make those assets more valuable 

led reasonable investors, including those who purchased LUNA or wLUNA since January 7, 2021, 

to view LUNA and wLUNA as investments into Terraform’s efforts.  Specifically, LUNA and 

wLUNA holders would reasonably expect to profit from Terraform’s efforts to grow the Terraform 

blockchain because this growth would in turn increase the demand for, and the value of, LUNA and 

wLUNA. 

218. Terraform and Kwon told investors that Terraform would use proceeds from LUNA 

sales to fund operations and help build and expand the Terraform ecosystem.  For example, in a July 

2018 token sale agreement, Terraform represented to potential investors that the funding round was 

“in furtherance of the establishment and operation of the systems” to be developed by Terraform. 

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219. In a 2021 public interview, Terraform’s business development lead stated that 

LUNA “is the ‘equity’ in our co[mpany].”   

220. On April 7, 2021, Kwon posted on X, “in the long run, $Luna value is actionable—it 

grows as the ecosystem grows.”  Luna holders could simply “sit back and watch me kick ass.” 

221. The Terraform Director of Special Projects similarly stated in a June 2021 video 

presentation, “[o]wning LUNA is essentially owning a stake in the network and a bet that the value 

will continue to accrue over time.” 

222. In marketing materials, Terraform further touted the professional expertise of its 

team, claiming that Terraform was “led by serial entrepreneurs” and was a team with “deep relevant 

expertise.” 

223. On December 28, 2023, based on these facts, and others, a federal court in the 

Southern District of New York found that both LUNA and wLUNA have been offered and sold as 

investment contracts.  SEC v. Terraform Labs Pte. Ltd et al., 23-cv-1346, 2023 WL 8944860 (S.D.N.Y. 

Dec. 28, 2023). 

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  

224. “Proof of Stake” (“PoS”) refers to a consensus mechanism used by some blockchain 

networks to reach agreement about which transactions are valid, to add transactions in new blocks 

to the blockchain, and to reward participants with additional crypto assets. 

225. A blockchain network using a PoS consensus mechanism typically selects a 

“validator” from a group of blockchain participants who have agreed to certain requirements 

necessary to maintain the blockchain and add new blocks. 

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226. To be considered for selection into the group or pool of validators, a potential 

validator must among other things commit, or “stake,” a pre-established minimum set amount of 

the blockchain’s native asset (e.g., ETH for the Ethereum blockchain).  

227. On Ethereum, a validator must stake 32 ETH, and these staked assets are “locked 

up” while staked in the blockchain’s PoS consensus mechanism, in part to incentivize validators to 

faithfully perform required functions.  

228. A “correction penalty” is deducted from the staked crypto assets of validators who 

do not meet a variety of standards including server uptime, consistency, and accuracy.   

229. “Slashing”— forced removal of a validator’s node from the network and an 

associated gradual loss of all of its staked ETH—occurs when a validator engages in affirmatively 

malicious activity.   

230. Conversely, validators earn rewards for their efforts, in the form of additional 

amounts of ETH—for example, by timely voting on proposed blocks, proposing new blocks, and 

participating in other consensus-related activities. 

231. To create a new block to add to the chain of blocks, the protocol chooses a validator 

from among those that have staked.  The more the holder stakes, and the less server downtime a 

potential validator exhibits, the more likely that holder is to be selected as a validator and receive the 

maximum staking reward.  Thus, the most successful staking operations maximize the chances of 

being selected by staking a large number of assets across nodes and having better computer 

resources to minimize server downtime. 

232. Since September 2022, the Ethereum network has employed the PoS mechanism 

described above. 

233. To serve as an Ethereum validator and potentially earn rewards, a validator must 

stake at least 32 ETH (worth more than $100,000 as of June 25, 2024) and run an Ethereum node.   

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234. The ETH used for staking is held in a smart contract called the “Beacon Deposit 

Contract” (referred to herein as the “Ethereum validator deposit contract,” which is part of the 

Ethereum staking and validation system). 

235. For those staking ETH, “rewards” are paid out in the form of additional ETH.  The 

amount of rewards that each validator earns depends on the validator’s performance.   

236. For example, a validator earns rewards for keeping its node online and participating 

in various blockchain maintenance activities, including but not limited to timely voting and 

proposing new blocks.   

237. Conversely, validators can be penalized for poor performance or slashed for 

malicious activity. 

B. Liquid Staking Pool Providers:  Lido and Rocket Pool 

238. Lido and Rocket Pool have each created and maintained respective staking 

programs, designed to capture the staking rewards described above. 

239. Lido and Rocket Pool each call their program a “liquid staking” program because—

as described below—investors are issued a tradable token in exchange for depositing funds into the 

program.  This token represents the investor’s interest in the program.  The token issued in 

exchange is referred to as a “liquid staking token” or “LST” and the LST can be traded on the 

secondary market. 

240. In Lido, the LST is called stETH; in Rocket Pool, the LST is called rETH. 

241. The amount of LST an investor receives is proportional to the amount of ETH they 

deposit. 

242. These staking programs allow investors to both obtain the rewards of staking and 

also purportedly retain the ability to redeem the value of their investment at any time. 

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i. The Lido Staking Program Is An Investment Contract. 

243. Lido launched its liquid staking platform in December 2020. 

244. To participate, investors deposit ETH with Lido. 

245. In return, Lido issues the investor another crypto asset, “stETH,” representing the 

investor’s pro rata interest in Lido’s staking program, including the investor’s original deposit of 

ETH plus any accumulated returns. 

246. Lido then uses investors’ deposited ETH in the Ethereum consensus mechanism to 

earn staking rewards—the financial returns for investors. 

247. Specifically, Lido pools the ETH deposited by investors into a Lido smart contract, 

which initiates the creation of a validator by depositing a 32 ETH bundle to the Ethereum validator 

deposit contract. 

248. As of June 25, 2024, over 28% of all staked ETH on Ethereum is staked in Lido’s 

staking program. 

249. Lido takes, as a fee, 10% of the staking rewards earned. 

250. The remaining rewards are accrued, pro rata, by stETH token holders. 

251. Lido markets its staking program as an investment opportunity. 

252. Lido also leads investors to reasonably expect that investors’ profits will come from 

Lido’s efforts. 

253. According to Lido’s website, from December 2020 to February 2024, Lido’s staking 

program returned an annualized percentage gain of 3% to 9%. 

254. In a blog post dated December 28, 2020, Lido stated:  “Lido allows users to stake 

any amount of ETH – without the need to maintain complex infrastructure.” 

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255. From at least June 2021 to June 2024, in a “Help” article on its website, Lido stated 

that staking “requires expert knowledge and complex and costly infrastructure” and that through 

Lido “users can eliminate these inconveniences.” 

256. Lido claimed in an October 2020 document posted to its website that it is “more 

profitable” than other staking pool providers because of its fee model and the quality of its node 

operators. 

257. From at least February 2023 to June 2024, another “Help” article on Lido’s website 

claims to allocate investors’ staked ETH across multiple, high-quality validator node operators (that 

is, participants in the Ethereum network consensus mechanism), minimizing the risks associated 

with staking ETH. 

258. In the same Help article, Lido states that it elects “professional and reputable node 

operators” and that the penalty and slashing risks are reduced “given the quality of the Lido 

validator set and its proven track record.” 

259. In short, Lido purportedly offers investors a “simplified participation in staking”—

deploying its resources and expertise to achieve staking rewards that individual investors typically 

would not be able to achieve on their own. 

260. The holder of any stETH—whether issued directly from Lido or purchased in the 

secondary market—has the right to deliver the stETH to Lido to get back the pro-rata staked ETH 

plus accrued rewards. 

261. Lido treats all investors’ deposited ETH as fungible.  It does not purport to segregate 

investor funds. 

262. In light of the above, Lido offered and sold its staking program as an investment 

contract. 

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ii. The Rocket Pool Staking Program Is An Investment Contract 

263. Rocket Pool launched its platform in October 2021. 

264. To participate, investors deposit ETH with Rocket Pool. 

265. In return, Rocket Pool issues another crypto asset, “rETH,” representing the 

investor’s pro rata interest in Rocket Pool’s staking program, including the investor’s original deposit 

of ETH plus any accumulated returns. 

266. Rocket Pool then uses investors’ deposited ETH in the Ethereum consensus 

mechanism to earn staking rewards—the financial returns for investors. 

267. Specifically, Rocket Pool pools the ETH deposited by investors into a Rocket Pool 

smart contract, which initiates the creation of a validator by depositing a 32-ETH bundle to the 

Ethereum validator deposit contract. 

268. Rocket Pool takes a 0.05% fee of the staking rewards it earns. 

269. The remaining staking rewards accrue, pro-rata, to investors. 

270. Rocket Pool also markets its staking program as an investment opportunity. 

271. According to Rocket Pool’s website, rETH “accrues value over time.” 

272. Rocket Pool also leads investors to reasonably expect that investors’ profits will 

come from the efforts of Rocket Pool. 

273. As of June 2024, Rocket Pool advertised on its website an annual percentage return 

of approximately 3.11%. 

274. In an FAQ available on its website, Rocket Pool notes that its staking service makes 

staking available to investors who might not otherwise have the technical expertise necessary to 

interact with smart contracts or keep a node running 24/7. 

275. Indeed, according to Rocket Pool’s FAQ, its program “removes several high barriers 

to entry that exist with Proof of Stake on Ethereum.” 

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276. In a January 22, 2021, Medium Post, Rocket Pool stated that its program was “an 

easy and permissionless way to engage in staking without needing to run any staking infrastructure 

or even have 32 ETH.” 

277. The Rocket Pool FAQ states that it will “allow anyone to earn rewards on deposits 

as small as 0.01 ETH.”  

278. On its website, Rocket Pool also attempts to differentiate itself from other staking 

pool providers, claiming that “Rocket Pool is the only staking platform with a perfect score on 

ethereum.org.” 

279. According to Rocket Pool’s website, its protocol is highly secure and its “smart 

contracts have been extensively audited, multiple times, by some of the best auditors in the 

Ethereum ecosystem.” 

280. Rocket Pool also touts other reasons for investors to stake their ETH with Rocket 

Pool. 

281. In the January 2021 Medium post, Rocket Pool notes that the value of rETH is 

“protected against node slashing and downtime by several built in insurance mechanisms.” 

282. Specifically, Rocket Pool requires individuals that run Rocket Pool validator nodes to 

put up collateral to protect against losses that may result from penalties and slashing. 

283. Rocket Pool’s website states that “every rETH token is exactly the same, you will 

automatically receive the benefits of staking just by holding the token!” (Emphasis in 

original.) 

284. In light of the above, Rocket Pool offered and sold its staking program as an 

investment contract. 

285. Neither Lido nor Rocket Pool have ever filed registration statements with the SEC 

for the offer and sale of their respective staking program investment contracts. 

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

i. Through MetaMask Staking, Consensys Promotes, Offers, and Sells the Lido and Rocket 
Pool Investment Contracts To Its Users. 

286. On January 13, 2023, Consensys publicly announced the release of a program called 

MetaMask Staking. 

287. Consensys created MetaMask Staking to offer and sell the Lido and Rocket Pool 

staking program investment contracts to investors. 

288. The January 13 announcement stated:  “MetaMask Staking allows you to engage in 

liquid staking with two prominent providers, Lido and Rocket Pool, where by you can deposit your 

ETH and receive a token representing the value of your stake in return.” 

289. It called MetaMask Staking “an easy and convenient way to stake ETH.” 

290. On January 13, 2023, Consensys posted on the MetaMask Twitter account:  “We are 

extremely happy to announce that you can now stake ETH with Lido or Rocket Pool through the 

[MetaMask] Portfolio Dapp.”  This post included an image advertising “5.22% rewards” with Lido 

and “4.59% rewards” with Rocket Pool—highlighting the former as the “Highest rewards.” 

291. On May 16, 2023, Consensys posted on the MetaMask Twitter account:  “[U]sers 

can now stake and withdraw ETH directly from our liquid staking providers, Rocket Pool and 

Lido.”  And “Get started here,” pointing to a link to the MetaMask portfolio website. 

292. In promotional materials, Consensys claimed that MetaMask Staking would make it 

easier for individual holders of ETH to participate in staking. 

293. Specifically, in its January 13, 2023, announcement on its website, Consensys stated:  

“[S]taking can be a convoluted and complicated process for end-users.  MetaMask Staking will offer 

an easy-to-understand and trusted entry point for users interested in staking.  Through this new 

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feature, users can compare the rewards rate, network control, and popularity of different liquid 

staking providers and choose the one they want to stake with.” 

ii. Consensys’s MetaMask Staking User Interface. 

294. To use MetaMask Staking, investors must have ETH in their MetaMask Wallet. 

295. First, from the browser extension or mobile app, the investor clicks on “Stake,” or 

“Staking.”  They are then taken to the MetaMask Portfolio site, where they can then choose “ETH.” 

296. At this point, Consensys’s graphical interface presents the investor with two options:  

Lido and Rocket Pool. 

                           

 

297. Consensys’s MetaMask Staking program will highlight the option with the “highest 

rewards.” 

298. If either Lido or Rocket Pool is at or near capacity, Consensys’s MetaMask Staking 

software disables the ability to stake with that program. 

299. In any event, an investor can choose either the Lido or Rocket Pool staking program 

by clicking “Stake.” 

300. On the following screen, an investor can input the number of ETH that they would 

like to invest in one of the staking program investment contracts and click “review.” 

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301. At that point, Consensys’s MetaMask Staking software shows the investor a screen 

with the number of the staking pool tokens they will receive in return, their “estimated rewards,” 

and the “estimated gas fee.” 

302. If the investor wishes to proceed with their request to invest in the staking program 

investment contract, the investor clicks “confirm.” 

303. If MetaMask Staking successfully completes the transaction, the investor will see a 

screen that says, “Transaction Complete.” 

  iii. Consensys Offers and Sells the Lido and Rocket Pool Investment Contracts To Investors. 

304. Accordingly, Consensys offers and sells the Lido and Rocket Pool investment 

contracts to investors through the MetaMask Staking platform. 

305. Consensys makes this process appear simple and easy to non-technical investors, 

while performing the technical series of actions necessary to transfer the investor’s ETH to Lido or 

Rocket Pool and transfer stETH or rETH to the investor in return. 

306. When the investor clicks “confirm,” this signals the MetaMask Staking software to 

take the steps necessary to exchange the investor’s ETH for rETH or stETH.  Specifically, 

Consensys has programed MetaMask Staking software to take the steps described below. 

307. First, Consensys’s MetaMask Staking software reads the private key associated with 

the ETH in the investor’s MetaMask Wallet.   

308. Second, using this key, the software creates a blockchain transaction and transfers 

the investor’s ETH from the investor’s MetaMask Wallet into a smart contract called the MetaMask 

Staking Aggregator Router Smart Contract (the “MM Staking Router Smart Contract”). 

309. The MM Staking Router Smart Contract has its own Ethereum blockchain address. 

310. The investor has no control over the MM Staking Router Smart Contract. 

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311. The MM Staking Router Smart Contract address temporarily holds the investor’s 

ETH. 

312. Although Consensys has programmed its MetaMask Staking software so that 

Consensys can take a fee for each transaction, Consensys currently sets the fee variable at zero (i.e., 

it does not take a fee at this time). 

313. Consensys could, however, change the software at any time to assess a fee, in which 

case the amount of the fee would be diverted from the MM Staking Router Smart Contract into a 

blockchain address designated by Consensys. 

314. Third, Consensys’s software transfers the investor’s ETH from the MM Staking 

Router Smart Contract to the Lido or Rocket Pool Proxy smart contract (deployed by Lido and 

Rocket Pool, respectively). 

315. These Proxy smart contracts mint stETH or rETH, respectively, upon receiving a 

deposit of ETH, and, if the MM Staking Router Smart Contract sends ETH to the Proxy smart 

contracts, the Proxy smart contracts will transfer newly minted stETH or rETH, respectively, to the 

MM Staking Router Smart Contract. 

316. Fourth, the MM Staking Router Smart Contract transfers the stETH or rETH, as the 

case may be, to the investor’s MetaMask Wallet. 

317. As of March 11, 2024, investors had invested 100,252 ETH in the Lido staking 

program through MetaMask Staking and 8,375 ETH in the Rocket Pool staking program through 

MetaMask Staking.   

318. As of March 11, 2024, Consensys, through MetaMask Staking, offered and sold the 

Lido staking program to 32,449 unique blockchain addresses and offered and sold the Rocket Pool 

staking programs to 2,215 unique blockchain addresses. 

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319. For its part, Lido embraced MetaMask Staking as a platform through which its 

staking program would be offered and sold. 

320. On January 17, 2023, Lido announced on its blog that “Ethereum staking with Lido 

is now live on MetaMask!  Stake your ETH on MetaMask to earn yield and secure the Ethereum 

network from the comfort of your wallet.” 

321. Moreover, a former Lido employee testified that “in terms of a distribution channel 

[Consensys’s MetaMask was] a very highly valued target.” 

322. Accordingly, by the conduct described above, Consensys offered and sold, and 

continues to offer and sell, investment contracts for Lido and Rocket Pool, participating directly in 

the distribution of securities from the issuers—Lido and Rocket Pool—to the investor. 

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

323. As fully set forth in the preceding paragraphs, Consensys, through MetaMask Swaps, 

used the means and instrumentalities of interstate commerce to engage in the business of effecting 

transactions in securities for the account of others by, for example, soliciting potential investors in 

crypto asset securities, holding itself out as a place to buy and sell crypto assets (including crypto 

asset securities), providing investment advice by highlighting the “best” prices or “best” value, and 

otherwise facilitating trading in crypto asset securities by creating customer wallets (i.e., “accounts”), 

routing customer orders, handling customer crypto asset securities through Consensys-operated 

smart contract addresses, facilitating order execution by submitting blockchain transactions to a 

Consensys node, and receiving transaction-based compensation for doing so.  Consensys was 

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therefore required to register with the SEC as a broker or operate pursuant to an exemption or 

exception but did not do so. 

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

324. Through its MetaMask Staking program, Consensys also acts as a broker by effecting 

transactions in the Lido and Rocket Pool investment contracts for the account of others. 

325. As alleged above, Consensys solicits potential investors, holds itself out as a place to 

buy and sell the investment contracts, and recommends which of the two investment contracts will 

offer the highest rewards. 

326. Consensys then effects the transaction on the investor’s behalf. 

327. Specifically, as noted, Consensys through the MetaMask Staking software handles the 

investor’s assets by removing the investor’s ETH from the investor’s MetaMask wallet and 

transferring it to the MM Staking Router Smart Contract, which, in turn, transfers it to the Lido or 

Rocket Pool proxy smart contract. 

328. Finally, Consensys’s software, transfers the acquired token—stETH or rETH—into 

the investor’s MetaMask Wallet. 

 
FIRST CLAIM FOR RELIEF 

Violation of Exchange Act Section 15(a) 
 

329. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 329. 

330. By engaging in the acts and conduct described in this Complaint, Consensys, a 

person other than a natural person under the Exchange Act, is a broker and made use of the mails 

and the means and instrumentalities of interstate commerce to effect transactions in, or to induce or 

attempt to induce the purchase or sale of, securities for the account of others, without registering as 

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a broker, and without having an exemption or exception from such registration.  

331. By reason of the foregoing, Consensys violated, and, unless enjoined, will continue 

to violate Exchange Act Section 15(a) [15 U.S.C. § 78o(a)]. 

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

 

332. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 331. 

333. By virtue of the foregoing, Consensys, through its offers and sales of the Lido and 

Rocket Pool staking program investment contracts, directly and indirectly: (a) without a registration 

statement in effect as to those securities, (1) made use of means or instruments of transportation or 

communication in interstate commerce or of the mails to sell securities through the use or medium 

of any prospectus or otherwise, and (2) carried or caused to be carried through the mails or in 

interstate commerce, by any means or instruments of transportation, securities for the purpose of 

sale or for delivery after sale; and (b) made use of means or instruments of transportation or 

communication in interstate commerce or of the mails to offer to sell or offer to buy, through the 

use or medium of a prospectus or otherwise, securities as to which no registration statement had 

been filed. 

334. By reason of the conduct described above, Consensys violated, is violating, and, 

unless enjoined, will continue to violate Securities Act Sections 5(a) and 5(c) [15 U.S.C. §§ 77e(a) and 

77e(c)]. 

PRAYER FOR RELIEF 

 WHEREFORE, the Commission respectfully requests that the Court enter a Final 

Judgment: 

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I. 

Permanently enjoining Defendant and its agents, servants, employees and attorneys and all 

persons in active concert or participation with any of them from violating, directly or indirectly, 

Securities Act Sections 5(a) and (c) [15 U.S.C. §§ 77e(a), 77e(c)] and Exchange Act Section 15(a) [15 

U.S.C. § 78o(a)].  

II. 

Ordering Defendant to pay civil monetary penalties under Securities Act Section 20(d) 

[15 U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)]; and 

III. 

Granting any other and further relief this Court may deem appropriate or necessary for the 

benefit of investors pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)].  

JURY DEMAND 

 The Commission demands a trial by jury.  

Dated: New York, New York 
June 28, 2024 

/s Jorge G. Tenreiro___________________________   
Jorge G. Tenreiro 
Samuel Wasserman 
Daphna Waxman 
Amy Mayer 
Abigail Cooper 

 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
100 Pearl Street  
Suite 20-100 
New York, NY 10004-2616 
(212) 336-1100 
Email: [email protected] 
 
Attorneys for the Plaintiff  

Of Counsel 
Kristin Pauley  
Mark Sylvester 

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