US SEC loses court case against crypto ICO

04 Dec, 2018 | Updated: 04 Dec, 2018
by Joeri Cant
News
US SEC loses court case against crypto ICO

According to CCN, the U.S. federal court ruled a case between the U.S. Securities and Exchange Commission and a crypto ICO project called Blockvest in favor of the ICO project. To prosecute any ICO is going to be more complex from now on.

The president and chief legal officer at Blockchain, Marco Santori, tweeted out to his almost 29K followers that the SEC brought an enforcement action against a company called Blockvest, alleging that Blockvest’s ICO was a securities offering.

'The SEC asked the court for a preliminary injunction (an order freezing Blockvest’s assets, among other things) so it called a hearing on the evidence', Santori said.

However, the SEC failed to justify that the ICO in question was actually a security and the court refused to acknowledge the token as a security solely based on the distribution method of the asset.

The decision made by the federal court can not be seen as a loss for the SEC or as a huge victory for the cryptocurrency sector, but it can be seen as a precedent for the market, which would allow ICOs to potentially challenge the SEC in court.

The recent ruling will create  a more complex environment for both the SEC and investors in ICOs to challenge the issuer of a token and to claim that a token is a security based on U.S. regulations.

Santori said that 'the precedent established by the Blockvest case has raised the bar for any plaintiff seeking to sue ICO issuers'.

Related: Cryptocurrency lawsuits are spiking after SEC enforcement

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