Pro-Ethereum conglomerate Consensys has announced a mass round of layoffs that its founder and CEO Joe Lubin has primarily blamed on the Securities and Exchange Commission’s (SEC) “abuse of power” and “attacks.”

In a blog post announcing the 162 “right-size” job cuts — 19.5% of its 828 employees — Lubin also called out Congress for its “inability to rectify” Consensys’ legal woes.

The SEC is suing Consensys for several profitable business units that allegedly violate US law. In its June 28 suit, commissioners explained that Consensys’ Swaps feature of its MetaMask software acts as an unregistered broker that effects securities transactions on behalf of investors. Moreover, they say Consensys also sold unregistered securities through its MetaMask Staking.

Read more: SEC tries to expand crypto jurisdiction with Consensys lawsuit

For its part, the firm primarily argues that users control MetaMask software and do not rely on Consensys for these transactions. The SEC has counterargued in detailed court filings that the conglomerate’s suite of code, hosted services, nodes, relayers, and human-directed choices not only make MetaMask indispensable for many users but also demonstrate the company’s willful and profitable violations of law.

The main lawsuit is ongoing in the US District Court for the Eastern District of New York. The next meeting is scheduled for November 20 to set a schedule for evidence discovery.

Consensys has already lost one lawsuit against the SEC

Consensys has failed in many of its attempts to fend off SEC enforcement. Earlier this year, it preemptively sued the SEC after it received a Wells Notice.

On September 19, a federal judge dismissed that attempt. Lubin had asked a Texan court to rule that ETH transactions were somehow not securities transactions because they involved ETH, prohibit the SEC from suing companies for using ETH, and bless its Ethereum-friendly MetaMask wallet. The judge declined all of Lubin’s requests.

Consensys previously laid off 100 of its then-900 workers in January 2023. In 2018, when the company had some 1,200 workers, a layoff affected approximately 600 workers.

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.

The post Consensys blames SEC at top of 20% staff layoff announcement appeared first on Protos.

The United States Securities and Exchange Commission (SEC) has filed a lawsuit against Consensys, alleging that its MetaMask Swap service made it an unregistered broker. This lawsuit from the SEC comes after Consensys’ lawsuit against the SEC in April. 

MetaMask Swaps is a platform that helps facilitate trades of various cryptocurrency assets by aggregating quotes from different decentralized exchanges and market makers. It enables the user to easily select the best price in exchange for a small fee paid to Consensys.

The complaint alleges that Consensys, through the Swaps platform, has ‘collected fees worth over $250 million.’ It also claims that some of these liquidity providers ‘may share a portion of the fees it charges investors.’

Read more: One year on, the SEC can finally sue Binance — for the most part

According to the complaint, Consensys ‘exercises further discretion over which crypto assets it makes available.’ It highlights that Consensys maintains a ‘token restriction policy’ that details assets that it doesn’t enable trades in. Furthermore, the SEC lists a series of assets it considers securities that Swaps helped enable trades in. These include MATIC, AMP, AXS, BNB, COTI, DDX, FLOW, HEX, LCX, NEXO, OMG, POWR, RLY, XYO, MANA, CHZ, SAND, and LUNA.

The complaint also alleges that Consensys’ ‘MetaMask Staking’ platform sold unregistered securities in the form of tokens for Lido and Rocket Pool. These so-called ‘liquid staking’ tokens enable users to gain access to staking rewards without directly participating in validation. The complaint claims that these schemes represent investment contracts. 

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.

The post SEC tries to expand crypto jurisdiction with Consensys lawsuit appeared first on Protos.

Unless Joe Lubin’s massive Ethereum conglomerate has lied in a court document filed yesterday, “the Securities and Exchange Commission (SEC) now claims that ETH is a security subject to SEC regulation.” That’s a quote from ConsenSys’ new lawsuit filed in the US District Court for the Northern District of Texas. It’s the first time a major crypto company has credibly claimed that the SEC itself has designated ETH a security.

For years, the SEC has designated certain crypto transactions as securities transactions and occasionally, commissioners have referred to current coins or tokens as unregistered securities.

Now, according to ConsenSys, the SEC currently classifies ETH as a security. The news comes seven years after Ethereum’s initial coin offering (ICO). It has also been 19 months since the Merge switched Ethereum from proof-of-work (PoW) to proof-of-stake (PoS) validation.

Why is this news coming from a complaint by ConsenSys?

Maddeningly, the public still doesn’t have definitive proof from the SEC that it has classified ETH as a security. Nor has it designated particular sets of ETH transactions as securities transactions. The news comes instead from ConsenSys’ claim in a corporate lawsuit that “the SEC now claims that ETH is a security.”

Given this ambiguity, it’s helpful to start with the undisputed evidence. The SEC undeniably sent ConsenSys a Wells Notice — a formal document that explains the agency’s intent to sue unless the recipient responds with convincing counterarguments and evidence to prevent commissioners from filing the lawsuit.

A Wells Notice is typically a formality — an advance warning of a future legal action — but on rare occasions allows a prospective defendant to talk their way out of a lawsuit.

In this instance, ConsenSys has described the Wells Notice it received from the SEC. ConsenSys also characterized some of its telephone conversations with SEC staff relating to the Wells Notice.

According to ConsenSys, the SEC doesn’t designate ETH as a security in its Wells Notice. Instead, ConsenSys summarizes the SEC’s complaints about MetaMask Swaps and MetaMask Staking transactions. Importantly, section 68 of the suit doesn’t mention ETH at all.

Read more: Gary Gensler can’t say if ETH is a security because of the SEC

The redacted document that claims ETH is a security

So when and where did the SEC designate ETH a security? ConsenSys doesn’t answer, nor does it claim that the SEC designated ETH a security within the Wells Notice document; ConsenSys merely claims that the SEC, elsewhere, “now claims that ETH is a security.”

Instead of clearly specifying where and when the SEC made this designation, ConsenSys redacted this information. Specifically, section 10 claims that the SEC “secretly cemented its power-grab” over ETH as a security by issuing some document. That document is redacted and is “a document the SEC has designated non-public.”

Obviously, the reader is left to wonder what that document is. Unless the SEC or US District Court for the Northern District of Texas agrees to unredact that document’s description, the public might never know precisely where and when the SEC ostensibly designated ETH as a security.

It’s also possible that ConsenSys is lying by mischaracterizing actions by the SEC as designating ETH a security. Although lying in a court filing carries severe penalties, this is a remote possibility. It’s certainly in ConsenSys’ interests to make the argument about whether ETH is a security — an argument that has broad appeal and public support — instead of whether or not it illegally operated MetaMask Swaps or MetaMask Staking services.

If ConsenSys can reframe the argument about something related to but not actually about its allegedly illegal actions, it might be able to win in the court of public opinion — even if it loses in the court of law.

Read more: Is ether a security? New York’s Attorney General thinks so

ConsenSys wants to frame the argument

It’s certainly in ConsenSys’ best interests that people believe that the SEC has designated ETH as a security. The more outraged and indignant, the better. ConsenSys even wrote a sweeping, aspirational blog defending its lawsuit. The company writes that it’s defending “how future generations will manage economic, financial, social, political, and technological systems, creating a more equitable, transparent, and innovative world.” It’s trying to make a hashtag trend, #ETHforAll. 

The question is: Did three of the five SEC Commissioners ever actually vote that ETH is a security? It’s been seven years since its ICO, and 19 months since the Merge. If the SEC had designated ETH as a security, it could have let the public know or explained its opinion within a lawsuit, as it has with dozens of other coin designations.

Why, where, and when did the SEC decide to seal this determination?

According to ConsenSys, the SEC made an ‘about-face’ in April 2023 and secretly classified ETH as a security. It’s the first credible allegation of this designation in court. However, at time of publication, neither the SEC nor any of its five commissioners have confirmed this alleged designation.

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.

The post ConsenSys says the SEC designated ETH a security but won’t say where appeared first on Protos.

The English Premier League’s plan to shill crypto tokens to fans moved a step closer after it announced its intention to ink a £30 million-a-year deal with a new provider.

Sky News reports that the league was planning to launch the scheme alongside New York-based software giant ConsenSys but will now sit down with its 20 clubs to talk over the proposed new partnership with French start-up Sorare.

ConsenSys reportedly attempted to change the terms of the almost-agreed deal after NFT prices took a dive but now Sorare has apparently swooped in with a more lucrative offer.

If this new partnership were to be confirmed, Sorare, which is backed by French footballer Kylian Mbappe and Japanese tech investor, SoftBank, would work with the Premier League to produce NFTs based on still images.

Earlier this year, The Athletic reported that the Premier League was planning to split its NFTs into two separate categories — still images and videos. While ConsenSys was initially brought on board to handle the stills — a role that will now be taken by Sorare — NBA Top Shot creator Dapper Labs was potentially earmarked for video duties.

Read more: These six-figure NFTs are down 99%

When the deal between ConsenSys and the Premier League was first floated back in March, potential figures ranged anywhere up to £400 million over four years.

However, the deal was scaled back significantly after the NFT market hit the skids back in June.

For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.

The post Premier League ditches ConsenSys, picks Sorare for NFT launch appeared first on Protos.

Ethereum major player ConsenSys AG (CAG) reached a settlement with its former venture capital chief Kavita Gupta last week, reportedly worth millions of dollars.

Citing persons familiar, CoinDesk puts the settlement between $3 million and $10 million.

Gupta had been embroiled in a fierce legal battle with the Ethereum backer. She previously headed up the company’s venture capital arm between 2017 and 2019. 

“ConsenSys Mesh and Kavita Gupta have agreed to settle their respective litigations against each other,” said a CAG spokesperson (via CoinDesk).

“The parties agree that ConsenSys Mesh has not breached any of its contractual obligations to Ms. Gupta.”

Gupta says ConsenSys bullied her

In December last year, Gupta sought $30 million in monetary damages after the Brooklyn-based firm allegedly bullied her. 

In her complaint, Gupta claims to have grown ConsenSys’ coffers from $13.75 million to approximately $300 million.

She alleged that relations soured when it was time for her to get paid. That was when CEO Joseph Lubin turned on her, she said.

“Lubin’s motivation is clear — he and Gupta are the sole general partners of the fund. Every dollar that Gupta does not receive goes into Lubin’s pocket,” the complaint said.

Indeed, the Ethereum giant hit back with its own allegations, suggesting that Gupta tricked her way into the job by lying about a Harvard degree.

Earlier this year, a complaint filed in Delaware stated that Gupta duped CAG into hiring her “by claiming to have stellar qualifications.” That turned out to be fake.

ConsenSys claimed that the ex-VC chief’s “toxic and abusive personality” resulted in lost business and personnel leaving the company. 

“Gupta proved incapable of even basic tasks, much less of co-managing a venture capital fund,” said ConsenSys.

“Gupta also proved to have a toxic and abusive personality that further called her claimed credentials into question, and which caused ConsenSys to [lose multiple employees], who chose to quit rather than work with Gupta.”

Talking to CoinDesk, Gupta trashed ConsenSys’s rebuttal as an attempt to “take away my reputation” and “a public mockery.”

Read more: [ConsenSys to buy more Ether, revamp MetaMask with $450M raise]

According to her LinkedIn profile, Gupta has also worked for the US chamber of commerce and Fintech.TV.

Follow us on Twitter for more informed news.

Out now: the first three episodes of our new investigative podcast series Innovated: Blockchain City.

The post ConsenSys settles with former VC head Gupta for undisclosed ‘millions’ appeared first on Protos.

Ethereum giant ConsenSys says it will use some of the $450 million raised in its recent Series D to beef up its Ether holdings.

The round, which included Microsoft, Singaporean investment firm Temasek Holdings, and Japan’s SoftBank, valued the company at $7 billion. That’s more than double what it was worth in November last year.

ConsenSys pledged to direct another portion of the funds to a major revamp of its browser-centric crypto wallet MetaMask this year, noted Bloomberg.

The Brooklyn-headquartered software firm now claims MetaMask boasts 30 million active users, although it hasn’t yet qualified exactly how it classifies that group.

On Twitter, ConsenSys’ billionaire founder and chief exec Joseph Lubin (also an Ethereum co-founder) described his plans to buy more Ether with the raise.

“We’ve long maintained a significant treasury of ETH, stablecoins and other crypto tokens, and we are actively using our own financial infrastructure to put these assets to work in DeFi protocols and via staking in anticipation of Ethereum’s merge to Proof of Stake,” he said.

ConsenSys founder says Ethereum will always be number one in DeFi

Lubin told Bloomberg that raising the fresh funds wasn’t particularly difficult. This was especially so given the company’s already close ties with tech incumbent Microsoft.

A number of Microsoft clients have previously gotten on board with ConsenSys’ enterprise blockchain platform Quorum. ConsenSys acquired Quorum from Wall Street bigwig JP Morgan in August 2020.

ConsenSys is currently facing an in-depth audit after 35 former employees demanded an investigation into a 2020 intellectual property deal.

The transaction saw JPMorgan take significant stakes in MetaMask and Ethereum node network Infura, another major ConsenSys product.

Read more: [ConsenSys lawsuit reveals JPMorgan owns critical Ethereum infrastructure]

Following the round, Lubin also dismissed suggestions that Ethereum might one day surrender its number-one status in the DeFi foodchain.

According to Lubin (via Bloomberg), this is “not even a remote possibility.” He says this is down to Ethereum’s more robust security when compared with the likes of Solana or other smaller blockchains.

Follow us on Twitter for more informed news.

Out now: the first three episodes of our new investigative podcast series Innovated: Blockchain City.

The post ConsenSys to buy more Ether, revamp MetaMask with $450M raise appeared first on Protos.

A group of 35 shareholders of Ethereum giant ConsenSys AG (CAG) have filed for a special audit of a 2020 deal that saw JPMorgan Chase acquire an “influential” stake in two of its flagship products.

The former employees — who represent more than half of all CAG shareholders — want an investigation into the matter which allegedly saw:

“… fundamental intellectual property and subsidiaries illegally transferred from CAG into a new entity, ConsenSys Software Incorporated (CSI).”

This was in exchange for a 10% stake in the new entity and a $39 million loan by ConsenSys chief and Ethereum billionaire Joseph Lubin, according to a press release issued Wednesday.

The deal, known within CAG as Project North Star, resulted in financial institutions (JPMorgan) winning a significant slice in the company’s lucrative intellectual property (IP), specifically MetaMask and Infura.

Both crypto wallet MetaMask and node network Infura persist as arguably the Ethereum ecosystem’s most critical infrastructure.

Turns out, Wall Street fat cats JPMorgan directly profits from — and even controls — that infrastructure.

Not exactly what Satoshi Nakamoto envisioned when he embedded “Chancellor on brink of second bailout for banks” in Bitcoin’s genesis block.

Indeed, Project North Star has proven incredibly lucrative for CSI shareholders like JPMorgan. A year after the transaction, the IP in question was used to raise funds for CSI at a valuation of $3 billion.

After a current round, the ConsenSys spin-off CSI is expected to hit $7 billion.

Original CAG insiders reckon the deal was “to the detriment of the minority shareholders of CAG and to the benefit of Joseph Lubin personally.”

Ethereum co-founder Lubin is the majority shareholder of CAG and CSI. Forbes values Lubin’s fortune between $1 billion and $5 billion.

Ethereum infrastructure deal may be invalid after ConsenSys directors skipped meetings

The former ConsenSys employees are invoking an article of the Swiss Code of Obligations which, if successful, may render the deal void.

At the time of the transaction, both Lubin and board member Frithjof Weinert were directors of both CAG and CSI. Unfortunately, under Swiss and US law, dual representation in a situation like this is not allowed.

The shareholders are also flagging the fact that required annual shareholder meetings had to be delayed by two years, meaning they had no idea the illegal deal even happened.

Because these meetings never took place, Weinert was supposedly never officially re-elected to the company’s board and so was in no position to authorize Project North Star.

In lieu of these shareholder meetings, Lubin hosted an “informal informational event” in late 2021 at which CAG staff were informed their numbers would be slashed from 160 to 30 by the end of this year.

Read more: [Ethereum giant ConsenSys sues former fund manager for resume fraud]

This, coupled with movement of lucrative assets (MetaMask and Infura) from CAG to CSI meant “a de-facto liquidation of CAG, without the required consent of a shareholder meeting,” according to the shareholders’ press release.

This was, plaintiffs say, in breach of the directors’ duty to act in the company’s interests, considering it left shareholders holding equity in a company that didn’t actually own that much.

The shareholders asked anybody who holds or was promised CAG shares to contact them, vowed to “help all those who have been harmed,” and said they’re ready for upcoming court battles.

For what it’s worth, a ConsenSys Mesh (CAG) spokesperson told CoinDesk the company refutes the details the shareholders’ press release, saying:

“The business fundamentals and operating environment are entirely different today than at the time of the transaction, though the group would like to apply a valuation that might be achieved today to a set of projects that were pre-monetization during the darkest days of COVID when the transaction took place.”

They also said CAG was prepared to immediately file further actions once a Swiss auditor responds to the case.

Follow us on Twitter for more informed news.

Out now: the first three episodes of our new investigative podcast series Innovated: Blockchain City.

Edit 07:32 UTC, Mar 5: Included statement from ConsenSys AG via CoinDesk in the final paragraphs.

The post ConsenSys lawsuit reveals JPMorgan owns critical Ethereum infrastructure appeared first on Protos.

Ethereum backer ConsenSys is suing a former fund manager for resume fraud, alleging her disastrous performance and toxic personality alienated colleagues, scuppered lucrative investment opportunities, and damaged the firm’s reputation.

According to a complaint filed with a Delaware court on Monday, Kavita Gupta got the job on the back of a “stellar” resume. The plan was for her to handle a new venture capital fund focused on early-stage blockchain companies throughout 2018 and beyond.

But ConsenSys says it quickly became apparent that Gupta “lacked a basic understanding of fundamental venture capital concepts,” nor did she have the competence or knowledge to carry out her duties.

Still, Gupta persisted as a figure at blockchain and crypto event tracks across the world throughout her time at ConsenSys.

Court docs state she was paid an annual salary of $250,000, with a guaranteed $100,000 bonus. In total, she earned $600,000 between October 2017 and April 2019, says ConsenSys.

How to lose friends and intimidate people

ConsenSys’ filing claims that Gupta initially impressed founder and Ethereum billionaire Joe Lubin with tales of Harvard Business School (HBS) and MIT.

She also said she’d worked for The World Bank on green bonds and carbon swaps, and managed investment funds with over $150 million in play.

The company says Gupta claimed to have invented a number of financial products. She allegedly touted a network of contacts that included Mark Zuckerberg and Google’s Larry Page.

What ConsenSys says it got instead was somebody who was massively out of her depth. The company hired her oversee a brand new venture capital fund as a co-managing partner.

Gupta had secured an agreement with ConsenSys that would see her receive 20% of profits generated by a company specifically built to handle that fund.

“Gupta, however, turned out to be a fraud. During her short tenure at ConsenSys, Gupta proved incapable of even basic tasks, much less of co-managing a venture capital fund,” the document reads.

She received negative feedback from everybody she worked with, the firm said. A number of the complaints leveled at Gupta centered on her unprofessional behavior. This included the abuse of employees.

One specific example cited in court documents says Gupta attacked a senior manager over his weight, telling him to “move his fat ass up the stairs.”

A number of employees were said to have left the company rather than work with Gupta. A total lack of people skills also affected deals with other firms, said ConsenSys.

Indeed, a number of senior figures who worked for potential investment targets apparently refused to do business with Gupta. This, says ConsenSys, cost the firm potentially lucrative opportunities.

Gupta gave herself a royal title and a job at NASA

The complaint details how ConsenSys tried to track down proof of Gupta’s claims but instead found a raft of dodgy documents.

The company contacted HBS but the school said there was no record of Gupta ever attending.

Likewise, a purported “offer letter” from consulting firm McKinsey set alarm bells ringing. It evidently included dates inconsistent with the information on Gupta’s resume and featured a signature that was cut and pasted from another document.

But perhaps the most bizarre piece of “proof” produced by Gupta was a letter of recommendation from MIT president L. Rafael Reif.

The letter was full of typos, featured a number of different typefaces, and referred to Gupta as “HRH” (Her Royal Highness). 

Furthermore, ConsenSys was unable to uncover any proof of any of Gupta’s claimed inventions, including a wireless communication system used by the Indian Space Research Organization (ISRO).

There seemed to be no record of her working with NASA, either.

ConsenSys changes mind, wants its money back

ConsenSys allowed Gupta to resign instead of firing her when it uncovered her scheme. She was even allowed to keep the money she’d made during her one and a half years with the company.

However, the tale took another twist when Gupta attempted to extort ConsenSys following her resignation. She has allegedly threatened to “make false and defamatory allegations about ConsenSys and its management” unless the company pays her millions of dollars.

But ConsenSys has met Gupta with fire. “ConsenSys will not be shaken down by Gupta,” it stated in its filing.

“Gupta fraudulently induced ConsenSys to hire her and give her membership … based on false claims about her credentials; spent little more than a year at the [fund], during which time she performed disastrously; resorted to using forged documents when she was confronted about her resume fraud; and is now entitled to nothing from ConsenSys or the [fund].”

Read more: [Coinbase billionaire goes full tech bro, co-founds life extension startup]

ConsenSys is demanding she pay back all compensation earned during her time with the firm. This includes more than $600,000 in salary and bonuses.

In any case, it’s not clear why ConsenSys only spotted Gupta’s alleged resume fraud after paying her more a half-million dollars.

Protos has reached out to ConsenSys to learn more about its compliance processes for hiring executives, and Gupta for comment.

Looking for bite-sized news? We’re on Twitter.

The post Ethereum giant ConsenSys sues former fund manager for resume fraud appeared first on Protos.