Dec 3, 2018 15:10 UTC
Dec 5, 2018 at 13:46 UTC
Followup: Federal Court Ruling In ICO Blockvest vs SEC (1-0)
If you have been following the legal battle between ICO Blockvest and the US Securities and Exchange Commission, you are probably aware that things are not looking too good for the SEC. Last week BTC Wires had reported how U.S. SEC’s Request Regarding ICO Got Turned Down By District Judge.
The SEC brought a legal action against Blockvest, claiming that it was a securities offering, but they however failed to justify how exactly the ICO was a security.
Marco Santori, the president and chief legal officer at Blockchain, said:
“The SEC brought an enforcement action against a company called Blockvest, alleging that Blockvest’s ICO was a securities offering. SEC asked the court for a preliminary injunction (an order freezing Blockvest’s assets, among other things) so it called a hearing on the evidence.”
Naturally, the court refused to brandish the token as a security, just because the SEC claimed it was so, based on the method of distribution of the ICO.
“According to the court, in the ICO context there must be a ‘risk of financial loss’. This supports the proposition that something like an airdrop, by itself, cannot be a securities offering, even if the airdropped tokens are pre-functional. Admittedly rare today but possible”
This just goes to show that the court wants plaintiffs to have sufficient justification for filing a lawsuit against an ICO and terming it a security, because it cannot be directly correlated to the method in which the asset was introduced to the market.
(Read more about: Airdrops In Cryptocurrencies: Everything You Needed To Know)
It is a memorable win for the cryptocurrency sector because of the legal precedent that it sets. What this ruling has accomplished is that it has shown how ICOs can challenge the accusations of the SEC based on certain technicalities, if they have sufficient evidence to back up their claim.
SEC chairman Jay Clayton however does not feel that this is a monumental loss for the department. He cites the current existing US regulations as proof enough as to why the ICOs on the market today, should be considered as securities.
(Read more about: Security Tokens)
Santori also added any plaintiff seeking to sue ICO issuers has to be more careful in the future:
“As my colleagues in twitter law have stated, SEC pretty much got what it wanted with regard to Blockvest. No bloody noses here. The precedent, though, is lasting, and definitely raises the bar for any plaintiff – public or private – seeking to sue ICO issuers. It’s going to be more complex, I think, than any of us realized. And a lot gets lost in the world of ICOs, like remembering.”