US Judge Declares That Boxer-Backed ICO Coin Is A Security
A judge in a Florida court has put out a new analysis describing how a cryptocurrency token is an official security.
Andrea Simonton, Magistrate Judge of the Southern District of Florida, in a new report on whether to hold assets of the Centra Tech Crypto Startup (Endorsed by Floyd Mayweather), recently explained why the company’s token demonstrates the different factors that make a security what it is according to law. Even though this may not be a precedented other similar court cases that have occurred, the new report could be made in other legal issue battles that have occurred when asking if cryptocurrency tokens are securities or not.
The defendants in question are notably in no way challenging the assertion of the coin represented by Centra is a definite security. Also, according to the document – not like the case brought by the U.S. Securities as well as Exchange Commission. This decision is part of a larger lawsuit that was filed previously by investors who claim they lost income because of securities sold that are unregistered.
As CoinDesk that was previously reported, the new startups co-founder has all been indicated in several different securities fraud, including wire fraud as well as conspiracy charges which were brought up. Part of the cases are focused around the idea that the CTR Coin sold to investors by Centra Tech is a security.
The court, according to Howey Rule – stated that it is believed that the token can be used to satisfy all three of the prongs on what officially governs an “investment contract,” thereby making it a security.
The three prongs included in the facts that investment as an asset, investors can greatly benefit financially regardless of the success or failure of a company. Centra Tech is completely reliant on the effort of its founder. The Judge Explains:
“Because the success of Centra Tech and the Centra Debit Card, CTR Tokens, and cBay that it purported to develop was entirely dependent on the efforts and actions of the Defendants, the third prong is satisfied. Therefore, the offering of Centra Tokens was an investment contract under the Securities Act, such that the Defendants sold or offered to sell securities by virtue of the Centra Tech ICO.”
A lawyer, Stephen Palley – who is considered an expert in the blockchain as well as cryptocurrency matters also stated in a recent tweet on the decision is not a binding precedent when in other court systems,
“It’s what lawyers call ‘persuasive authority’ and pithy enough to be easily quoted in other opinions.”