A Court is about to decide whether the government can regulate Bitcoin like stocks

Agency report

The U.S. is trying to regulate cybercurrency offerings. It’s still unclear whether it has the authority to do so.

Federal judges in Brooklyn, New York, are about to rule on the question. In doing so, they could determine whether Bitcoin and other stateless currencies are securities that can be regulated like stocks or bonds. Courts across the country are likely to consult these rulings when considering other cybercurrency cases.

“If it’s not a security, then what is it?” said Peter Henning, a former SEC and Justice Department lawyer who is now a professor at Wayne State University Law School.

In what is believed to be the first criminal case focusing on an initial coin offering, Brooklyn businessman Maksim Zaslavskiy was charged in a case unsealed in November with promoting digital currencies backed by investments in real estate and diamonds that U.S. prosecutors said didn’t exist. The Securities and Exchange Commission also sued.

The U.S. is trying to regulate cybercurrency offerings. It’s still unclear whether it has the authority to do so.

Federal judges in Brooklyn, New York, are about to rule on the question. In doing so, they could determine whether Bitcoin and other stateless currencies are securities that can be regulated like stocks or bonds. Courts across the country are likely to consult these rulings when considering other cybercurrency cases.

“If it’s not a security, then what is it?” said Peter Henning, a former SEC and Justice Department lawyer who is now a professor at Wayne State University Law School.

In what is believed to be the first criminal case focusing on an initial coin offering, Brooklyn businessman Maksim Zaslavskiy was charged in a case unsealed in November with promoting digital currencies backed by investments in real estate and diamonds that U.S. prosecutors said didn’t exist. The Securities and Exchange Commission also sued.

Jason Gottlieb, Lacroix’s U.S. lawyer, said in a letter to the judge that he would challenge the SEC’s contention that it has authority over the matter.

“It’s the Canadians who have unique jurisdiction here, and for reasons of international comity, I don’t think we should be mucking about in their process,” Gottlieb told the judge at a Jan. 9 hearing.

The SEC’s lawyers plan to file their response to Gottlieb’s argument in May. Ryan White, a spokesman for the SEC, declined to comment on Gottlieb’s claims.

Case Law

The answer to whether cybercurrencies are securities may be found in SEC v. J. Howey Co., a Supreme Court case decided seven decades ago.

The 1946 case involved a Florida orange-growing business that sold grove plots and promises of significant profits using a “service contract” that paid landowners based on the harvest’s success. After the SEC sued, Florida landowner W.J. Howey Co. argued that it was selling real estate and services and not a security, but the Supreme Court disagreed and found Howey could be held liable for violating securities laws.

“Many people quote the ‘Howey test’ as if it were a monolith cast in stone, but it’s not,” said Todd Kornfeld, a securities law specialist at Pepper Hamilton in New York. “The SEC has certainly chosen to read it a certain way, and different courts have had somewhat varying formulations.”

Then there are lessons from the earthworm investment craze of the 1970s. Investors were lured into spending millions of dollars to breed earthworms purportedly in demand by fishermen and zoos. The sellers were accused of hawking a fraudulent get-rich-quick scheme.

In a 1979 case known as Smith v. Gross, a federal appeals court concluded that an investment in a worm farm was an “investment contract” and established that the worms did, indeed, constitute a security.

What do you think?

-2 points
Upvote Downvote

Total votes: 2

Upvotes: 0

Upvotes percentage: 0.000000%

Downvotes: 2

Downvotes percentage: 100.000000%

Written by Abel Abel

Abel Abel is your leading blog that focus on breaking news, entrepreneurship and relationship

Comments

avatar
  Subscribe  
Notify of

My wife and I fight, hurt each other a lot, separate us – Pastor begs court

Breaking: George Weah reduces his salary by 25%