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The court simply denied the SEC's ‭request for a preliminary injunction, saying it will need to see discovery and proof to judge on the merits. The case still h

The court simply denied the SEC's ‭request for a preliminary injunction, saying it will need to see discovery and proof to judge on the merits. The case still has some way to go, it was not at all dismissed. “At this stage, without full discovery and disputed issues of material facts, the Court cannot make a determination whether the BLV token offered to the 32 test investors was a ‘security,’” https://www.scribd.com/document/394382912/Blockvest-Ruling https://www.scribd.com/document/394382912/Blockvest-Ruling

will_brown 8y ago
Well whereas the SEC had taken the position that airdrops could violate the securities laws of the tokens were a security... >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... So tokens even if securities may not violate securities laws by being distributed via airdrop. I think ultimately the tokens here will be securities here, unless the transfer of the tokens are restricted (and they include no right to company profits).
- Alex3917 8y ago
  > I think ultimately the tokens here will be securities here, unless the transfer of the tokens are restricted Transfer probably doesn't have to be restricted. From what I've heard, the promoters of the security aren't allowed to solicit exchanges to list their token, but aren't under any obligation to stop others from selling it.
  - will_brown 8y ago
    Well I’m just an attorney that works with the SEC on these matters, and have had these exact conversations with the Office of Chief Counsel. What do I know, keep the down votes coming.
    - Alex3917 8y ago
      I mean I'm not saying you're wrong, on the surface it just doesn't make any sense though and it's seemingly different than what the SEC was saying as recently as six months ago. It's easy to see how if something were a security then the issuer could be required to restrict transfer, but under the framework of the Howey Test (or whatever else) what is the justification for how not restricting transfer could make an airdropped asset a security if they didn't also do an ICO or do something else to make themselves a security? I mean clearly it could contribute to an expectation of profit, but how do the other prongs of the test get violated? Last year I did invent a novel mechanism to allow tokens to comply with securities laws while both allowing end users to spend them as utility tokens and accredited investors to profit from them as investments, so I'm curious to see if a real market need develops here.
      - will_brown 8y ago
        >Last year I did invent a novel mechanism to allow tokens to comply with securities laws while both allowing end users to spend them as utility tokens and accredited investors to profit from them as investments, so I'm curious to see if a real market need develops here. Not saying you didn’t. But keep in mind one of the biggest and most prominent law firms in the tech/startup/Blockchain space published the original “legal framework” for SAFTs (simple agreement for tokens) based on SAFEs(simple agreements for equity) which was premised on a utility token...18 months later the SEC dropped the hammer on companies who ICO’ed using said SAFT framework. So question did you submit your legal framework to the SEC and they told you it is compliant?
        Alex3917 8y ago
        > So question did you submit your legal framework to the SEC and they told you it is compliant? I haven't, but it's done in a way that makes it impossible for any of the prongs of the Howey Test to be met for non-accredited investors. (There is no investment, there is no possibility of profit, etc.) So if there are things that need to be changed, which there may be, they're probably relatively minor. > 18 months later the SEC dropped the hammer on companies who ICO’ed using said SAFT framework. What the SEC has repeatedly affirmed is that the law hasn't changed since the 1920s or whatever. The fact that the law firm in question may have been advising their clients to commit crimes doesn't mean the law has changed.
- gamblor956 8y ago
  The court did not makew substantive ruling. This is just a decision on one of many pretrial motions. It's not dispositive (i.e. precedential) on any issue in this case or any other case.

will_brown 8y ago

Well whereas the SEC had taken the position that airdrops could violate the securities laws of the tokens were a security... >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... So tokens even if securities may not violate securities laws by being distributed via airdrop. I think ultimately the tokens here will be securities here, unless the transfer of the tokens are restricted (and they include no right to company profits).

Alex3917 8y ago
> I think ultimately the tokens here will be securities here, unless the transfer of the tokens are restricted Transfer probably doesn't have to be restricted. From what I've heard, the promoters of the security aren't allowed to solicit exchanges to list their token, but aren't under any obligation to stop others from selling it.
- will_brown 8y ago
  Well I’m just an attorney that works with the SEC on these matters, and have had these exact conversations with the Office of Chief Counsel. What do I know, keep the down votes coming.
  - Alex3917 8y ago
    I mean I'm not saying you're wrong, on the surface it just doesn't make any sense though and it's seemingly different than what the SEC was saying as recently as six months ago. It's easy to see how if something were a security then the issuer could be required to restrict transfer, but under the framework of the Howey Test (or whatever else) what is the justification for how not restricting transfer could make an airdropped asset a security if they didn't also do an ICO or do something else to make themselves a security? I mean clearly it could contribute to an expectation of profit, but how do the other prongs of the test get violated? Last year I did invent a novel mechanism to allow tokens to comply with securities laws while both allowing end users to spend them as utility tokens and accredited investors to profit from them as investments, so I'm curious to see if a real market need develops here.
    - will_brown 8y ago
      >Last year I did invent a novel mechanism to allow tokens to comply with securities laws while both allowing end users to spend them as utility tokens and accredited investors to profit from them as investments, so I'm curious to see if a real market need develops here. Not saying you didn’t. But keep in mind one of the biggest and most prominent law firms in the tech/startup/Blockchain space published the original “legal framework” for SAFTs (simple agreement for tokens) based on SAFEs(simple agreements for equity) which was premised on a utility token...18 months later the SEC dropped the hammer on companies who ICO’ed using said SAFT framework. So question did you submit your legal framework to the SEC and they told you it is compliant?
      - Alex3917 8y ago
        > So question did you submit your legal framework to the SEC and they told you it is compliant? I haven't, but it's done in a way that makes it impossible for any of the prongs of the Howey Test to be met for non-accredited investors. (There is no investment, there is no possibility of profit, etc.) So if there are things that need to be changed, which there may be, they're probably relatively minor. > 18 months later the SEC dropped the hammer on companies who ICO’ed using said SAFT framework. What the SEC has repeatedly affirmed is that the law hasn't changed since the 1920s or whatever. The fact that the law firm in question may have been advising their clients to commit crimes doesn't mean the law has changed.
gamblor956 8y ago
The court did not makew substantive ruling. This is just a decision on one of many pretrial motions. It's not dispositive (i.e. precedential) on any issue in this case or any other case.