Judge to SEC: You Haven't Shown This ICO Is a Security Offering
U.S District Judge Gonzalo P. Curiel on Tuesday found that the SEC couldn't show that investors had bought into the Blockvest ICO with an expectation of making a profit from the efforts of others.
November 27, 2018 at 06:51 PM
4 minute read
In what appears to be the first federal decision finding that the U.S. Securities and Exchange Commission hasn't shown a digital asset offered in an initial coin offering is a security, a judge in San Diego has turned back a request from the SEC for a preliminary injunction against the backers of the Blockvest ICO.
U.S District Judge Gonzalo Curiel of the Southern District of California, who previously granted the SEC's ex parte request for a temporary restraining order and froze the assets involved in the ICO, found Tuesday that the SEC couldn't show that investors bought into the Blockvest offering with the expectation of making a profit from the efforts as others—part of the three-part “Howey” test for the definition of a security under the the 1946 U.S. Supreme Court decision in SEC v. W.J. Howey Co.
SEC representatives didn't immediately respond to a request for comment on the decision. But former SEC lawyers now in private practice said that the case sends a message to the agency that courts are paying close attention to the question of whether digital tokens fit the legal definition of a security—even in cases where there are allegations that ICO investors are being defrauded.
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