ATBCoin’s Motion To Dismiss Lawsuit Denied As Small Security Token Regulation Insight Gained


ATBCoin’s Motion To Dismiss Lawsuit Denied

A complaint has been filed against ATBCoin in the United States District Court for the Southern District of New York. The lawsuit alleges a putative class and was brought by Plaintiff Raymond Balestra (“Balestra”).

Balestra alleges that ATBCoin LLD, Edward Ng, and Herbert W. Hoover,

“violated the Securities Act of 1933, 15 U.S.C. §§ 77a, et seq., by selling unregistered securities through a initial coin offering of the digital asset ATB.”

ATBCoin filed a motion to dismiss Balestra’s allegations. Defendants argue in their motion to dismiss, in part, that ATBCoin does not meet the standard of a security under the Howey Test. They assert that the token does not:

“entitle purchasers to a pro rata share of the profits derived from any ATB-managed transaction” and thus, it cannot be a security.

Balestra filed a response, and Balestra filed a reply, both were accompanied by declarations.

The court did not find this argument persuasive. It analyzed whether Balestra alleged sufficient facts to support its claim and found that it does. The court held,

“I find Plaintiff’s Complaint plausibly alleges facts demonstrating that the ATB Coin qualifies as an ‘investment contract’ under the Howey test. Defendants’ motion to dismiss the Complaint on the ground that the ATB Coin is not a security within the meaning of § 2(a)(1) of the Securities Act is therefore denied.”

Interestingly enough, to support its determination, the court relied upon an SEC enforcement action, In Matter of Munchee Inc. Securities Act Release No. 10445, 2017 WL 1065969 (Dec. 11, 2017).

The court likened the action against ATBCoin to the token offering in Munchee, and determined that horizontal privity existed. The court found:

“Like the MUN token, the value of the ATB Coins was dictated by the success of the ATB enterprise as a whole, thereby establishing horizontal commonality.”

At this stage of the process, Balestra was successful in overcoming ATBCoin’s motion to dismiss. However, there is still a long road ahead concerning litigation and facts must be set forth to prove the allegations in the complaint.

BTC-Price-Prediction-Todays-Top-Crypto-ETH-NEO-and-XRP-Technical-Analysis

Get Daily Headlines

Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

What to Know More?

Join Our Telegram Group to Receive Live Updates on The Latest Blockchain & Crypto News From Your Favorite Projects

Join Our Telegram

Stay Up to Date!

Join us on Twitter to Get The Latest Trading Signals, Blockchain News, and Daily Communication with Crypto Users!

Join Our Twitter

Add comment

E-mail is already registered on the site. Please use the Login form or enter another.

You entered an incorrect username or password

Sorry, you must be logged in to post a comment.
Bitcoin Exchange Guide