US Corporate Law News: securities laws may cover ICOS

30 September 2018 | Applicable law: US

A judge in the Eastern District of New York has ruled that initial coin offerings may be subject to securities laws. The court denied the defendant's motion to dismiss an indictment that alleges he committed securities fraud for selling tokens that he claimed represented shares in a real estate venture and a separate diamond business. 

The defendant argued that the investment schemes and initial coin offerings did not involve securities and, further, that the Exchange Act and SEC Rule 10b-5 are unconstitutionally vague as applied to this case. The judge concluded that the "elements of a profit-seeking business venture" were sufficiently alleged in the indictment, that a reasonable jury could conclude that investors provided the capital and shared in the earnings and profits and that the promoters managed, controlled and operated the enterprise, thereby opening the defendant to securities laws violations.

For more information see here.

This article was written with contributions from Tim Piscatelli.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.


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