Inside MetaMask Swaps: SEC Details Unregistered Brokerage Activities by Consensys

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.

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.