SEC Telegram Rejection: Simply Down To The Howey Test?

SEC Telegram Rejection: Simply Down To The Howey Test?
ôîòî ïîêàçàíî ñ : bitcoinist.com

2019-10-16 16:00

Following the SEC clampdown on Telegram’s Gram-token issuing to early investors, many have accused it of inconsistency. But some commentators have suggested that actually the SEC is being very consistent, and simply applying the Howey test as always.

SEC Heavy Handed Or Fair Enough?

Simply put, the Howey test says that a security fulfils four criteria. A cryptocurrency is deemed a security, if and only if: a person (1) invests money, in (2) a common enterprise, with (3) an expectation of profits, (4) through the efforts of others.

Whether an 85 year-old law relating to a citrus farm is suitable for judging cryptocurrencies is a different matter entirely. The Securities and Exchange Commission (SEC) decision would seem to be directly based on the Howey test.

Criteria 1 and 2 are self evident. When venture capitalists invest money they expect a profit. So the matter then becomes down to whether this is a common enterprise based on the efforts of others.

The SEC ruling repeatedly states the fact that Telegram and the Durov’s control and manage everything. This would indeed suggest that this ‘common enterprise’ is driven through the managerial efforts of others.

So How Can Future Efforts Avoid The Same Fate?

According to Electric Capital co-founder, Avichal Garg, there are three main issues to avoid:

A/ Don’t have the company and foundation controlled by the same people
B/ Don’t use funds to finance an existing company
C/ Don’t have only company employees committing code

These could be addressed through greater integration of third party development on the chain, and building utility at launch rather than future utility. Garg suggests that projects should avoid promising investors a return, and perhaps avoiding conversations with exchanges altogether.

However, if this sounds like potentially positive news, Coinmetrics co-founder, Nic Carter, thinks it is anything but. He tweeted:

Many will read this thread and think “this bodes well for my favorite VC backed coin” but I’d say it reads like the opposite.

Carter cited a lack of public market standard disclosure across the industry, and questioned the supposed ‘utility’ of any coin other than BTC and ETH.

Do you think the United States SEC are consistent in their crypto rulings? Add your thoughts below!

Images via Shutterstock

The post SEC Telegram Rejection: Simply Down To The Howey Test? appeared first on Bitcoinist.com.

Similar to Notcoin - Blum - Airdrops In 2024

origin »

Telegram Open Network (GRAM) íà Currencies.ru

$ 0 (+0.00%)
Îáúåì 24H $0
Èçìåíåèÿ 24h: 0.00 %, 7d: 0.00 %
Cåãîäíÿ L: $0 - H: $0
Êàïèòàëèçàöèÿ $0 Rank 99999
Äîñòóïíî / Âñåãî 0 GRAM

sec howey test simply telegram security rejection

sec howey → Ðåçóëüòàòîâ: 23


US Judge Rules ICOs Covered by Securities Law

After a long period of silence and uncertainty, the U.S. government has stated that at least two initial coin offerings (ICOs) are not exempt from security laws. Howey vs SEC The ruling comes after ICO participants from Recoin and Diamond Reserve Club filed a federal case against the projects’ founder Maksim Zaslavskiy for misleading investors, who […] The post US Judge Rules ICOs Covered by Securities Law appeared first on CryptoSlate.

2018-9-12 10:00