Court Fences SEC Off, Says Blockvest Tokens Aren't Securities

In a historical case, a judge from the USA failed against the SEC over the Blockvest ICO token security classification. The judge ruled that the tokens of the ICO were not securities. However, the case is not so clear as it sounds. the ICO could still go to court and be fined. Nonetheless, this could seat a great precedent for upcoming cases.

ICO Blockvest Tokens Not Securities

Blockvest, an ICO sued by the SEC (Securities and Exchange Commision) got off the hook temporarily by making judge Gonzalo Curiel state that their tokens were not securities. Judge Curiel of California reached this decision after declaring that they failed to prove so. To constitute a security, the SEC must prove that the startup passes the Howey Test fully, and Judge Curiel did not buy the SEC allegations.
First Court Fences SEC Off, Says Blockvest Tokens Aren't Securities
However, Blockvest actions are highly unethical. They directed their investors to think they registered with a fake agency called “Blockchain Exchange Commission”. This agency supposedly registered the ICO and approved its activities. This so-called agency does exist but does not have government support or affiliation.
The Blockchain Exchange Commission defines itself as “an independent, non-jurisdictional commission, established in order to enhance public understanding and appreciation of what the Blockchain does and how it operates in the global economy.

Little ICO, Mostly Friends

Blockvest had also fooled their investors by claiming to have an important angel investor. This investor would provide a support of 2.5 million dollars according to the issuer. But according to the defense this angel investor failed to comply with the deal, and the financing fell through.
First Court Fences SEC Off, Says Blockvest Tokens Aren't Securities
The Blockvest ICO had less than 40 investors. The amount invested was less than $10K on the ICO project, with almost every investor being a close friend of the defendant. A brilliant move on the defense stated that the tokens served only to test the exchange of the ICO. So no revenue could be expected for any of the investors. Also, the staff in charge of the ICO had agreed to not perform the token sale anymore.
This is one of the first times that a court fails against the SEC in an ICO case of this kind. However particular, it could set a precedent in how courts treat this kind of demands. Despite this, the SEC can still pursue a case in other court or try to fine him due to lack of registration or other charges. But, as of today, Blockvest tokens are not securities.

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