The U.S District judge has ruled that the initial coin offer (ICO) is subject to the securities laws, can qualify as the ICO token securities(based on the result of the Howey test), and by lying to the investors, the beneficial securities fraud can qualify as. The defendant was accused of promoting ICO, who was advertising investment in real estate and diamonds.
Although the details of the case appear directly, on a historical basis, a federal judge has declared for the first time that the ICO is under the Securities Act.
The respondent, a resident of Brooklyn(in New York City), had filed a motion to dismiss Maksim Zaslavkiy with his lawyers, stating that “securities are unconstitutionally unclear as enforcing the law.”
However, District judge Raymond Damni rejected the proposal and said that the tokens (Recoin and DposalRC) in the two ICOs allegedly promoted by Zaslavkiy can be considered as security, if all the allegations of the DOJ’s were true, then in the case the tokens subject for relevant securities law.
Judge Dearie stated that:
“Stripped of the 21st-century jargon, including the defendant’s own characterization of the offered investment opportunities, the challenged indictment charges a straightforward scam, replete with the common characteristics of many financial frauds.”
Stating the Obviousrprise
It seems as thought the landmark ruling has come as little to surprise to the wider crypto community. One of the leading crypto regulation research centers, Coincenter, has been advocating that ICOs be classified as securities since 2015:
Last year, the ICO is being used as a vehicle for fast sandals and according to a research report of saints, in the year 2017, there were 80% of the ICO scams. In increasing number of ICO scams means that recent decision has been welcomed by most crypto communities because it means that all the icons should comply with the relevant serurities laws, which have been designed to protect the investor
The rising number of ICO scams has meant the most recent ruling has been welcomed by the majority of the crypto community as it means that all ICOs should adhere to the relevant securities laws, which are designed to protect investors.