DAO Investigative Report states US citizens are liable for ICO participation

[CrYpToChRi$]

I have not heard too much talk regarding the recent (July 25th, 2017) release of the DAO Investigative Report. It clearly states that US citizens who participate in ICOs that are considered securities can be legally held liable. I understand no charges were brought in this case in particular, but what does this mean for US citizens who invested into other ICOs?

Full report: https://www.sec.gov/litigation/investreport/34-81207.pdf
US Investors held liable: http://imgur.com/a/IcNYx


Recently the SEC declared the DAO as securities: https://www.sec.gov/news/press-release/2017-131

Basically this means that they are subject to the agencies regulations. From their standpoint, these tokens are a form of shares and selling them without licenses violates federal securities laws. Many people who were unable to access ICOs because of geo-restrictions used VPNs. From my knowledge, the reasons ICO providers prevented US citizens from participating was to protect themselves legally from the United States government. That is true, but also note that the investor themselves can be at fault as well.

Reference this thread by Marco Santori, who is well known when it comes to law and cryptocurrency. He had this to say about the recent SEC statements. Please pay close attention to #6. Let me know your thoughts!

https://twitter.com/msantoriESQ/status/890200014370287620
https://twitter.com/msantoriESQ/status/890187373828616192

[squatter]

I have not heard too much talk regarding the recent (July 25th, 2017) release of the DAO Investigative Report. It clearly states that US citizens who participate in ICOs that are considered securities can be legally held liable. I understand no charges were brought in this case in particular, but what does this mean for US citizens who invested into other ICOs?

Full report: https://www.sec.gov/litigation/investreport/34-81207.pdf
US Investors held liable: http://imgur.com/a/IcNYx


Recently the SEC declared the DAO as securities: https://www.sec.gov/news/press-release/2017-131

Basically this means that they are subject to the agencies regulations. From their standpoint, these tokens are a form of shares and selling them without licenses violates federal securities laws. Many pI eople who were unable to access ICOs because of geo-restrictions used VPNs. From my knowledge, the reasons ICO providers prevented US citizens from participating was to protect themselves legally from the United States government. That is true, but also note that the investor themselves can be at fault as well.

Reference this thread by Marco Santori, who is well known when it comes to law and cryptocurrency. He had this to say about the recent SEC statements. Please pay close attention to #6. Let me know your thoughts!

https://twitter.com/msantoriESQ/status/890200014370287620
https://twitter.com/msantoriESQ/status/890187373828616192

Sounds like we need to hire a lawyer to know which tokens are safe to invest in, based on that tweet thread. In fact, knowing Marco Santori‏, that thread was a big advertisement to provide exactly that service.

I gave the SEC decision a look over, and my take is that they are taking a hands-off approach. I don't think they are going to find investors at fault for anything. It's more of a question of establishing a test for future cases against those offering unregistered securities (including exchanges that allow trading of such tokens for US customers).

[CryptoBry]

These are just words and no meat actually. That SEC statement on ICO was more of an advisory rather than an announcement of law enforcement. SEC came up with that stand because of many concerns expressed by the many on ICO. Now, if I am a US citizen and I happen to have bought an ICO maybe all I have to do is never tell anyone about it...just pretend that the transaction never took place in the first place. I don't think that SEC is like a god that can see, hear and touch everything everybody all the time.

[GreenBits]

I have not heard too much talk regarding the recent (July 25th, 2017) release of the DAO Investigative Report. It clearly states that US citizens who participate in ICOs that are considered securities can be legally held liable. I understand no charges were brought in this case in particular, but what does this mean for US citizens who invested into other ICOs?

Full report: https://www.sec.gov/litigation/investreport/34-81207.pdf
US Investors held liable: http://imgur.com/a/IcNYx


Recently the SEC declared the DAO as securities: https://www.sec.gov/news/press-release/2017-131

Basically this means that they are subject to the agencies regulations. From their standpoint, these tokens are a form of shares and selling them without licenses violates federal securities laws. Many pI eople who were unable to access ICOs because of geo-restrictions used VPNs. From my knowledge, the reasons ICO providers prevented US citizens from participating was to protect themselves legally from the United States government. That is true, but also note that the investor themselves can be at fault as well.

Reference this thread by Marco Santori, who is well known when it comes to law and cryptocurrency. He had this to say about the recent SEC statements. Please pay close attention to #6. Let me know your thoughts!

https://twitter.com/msantoriESQ/status/890200014370287620
https://twitter.com/msantoriESQ/status/890187373828616192

Sounds like we need to hire a lawyer to know which tokens are safe to invest in, based on that tweet thread. In fact, knowing Marco Santori‏, that thread was a big advertisement to provide exactly that service.

I gave the SEC decision a look over, and my take is that they are taking a hands-off approach. I don't think they are going to find investors at fault for anything. It's more of a question of establishing a test for future cases against those offering unregistered securities (including exchanges that allow trading of such tokens for US customers).

you dont need a lawyer. you only need the howey test observe:

http://consumer.findlaw.com/securities-law/what-is-the-howey-test.html

The "Howey Test" is a test created by the Supreme Court for determining whether certain transactions qualify as "investment contracts." If so, then under the Securities Act of 1933 and the Securities Exchange Act of 1934, those transactions are considered securities and therefore subject to certain disclosure and registration requirements....

....The Supreme Court, in issuing its decision finding that the defendants' leaseback agreement is a form of security, developed a landmark test for determining whether certain transactions are investment contracts (and thus subject to securities registration requirements). Under the Howey Test, a transaction is an investment contract if:

It is an investment of money
There is an expectation of profits from the investment
The investment of money is in a common enterprise
Any profit comes from the efforts of a promoter or third party

Essentially, when you look at a whitepaper, look at the reason they are issuing you a token. Is there an expectation of profit? Not a speculative valuation spike, like the UET, but profit sharing/interest. If so, its a security.

Its that simple

[Blocken]

These are just words and no meat actually. That SEC statement on ICO was more of an advisory rather than an announcement of law enforcement. SEC came up with that stand because of many concerns expressed by the many on ICO. Now, if I am a US citizen and I happen to have bought an ICO maybe all I have to do is never tell anyone about it...just pretend that the transaction never took place in the first place. I don't think that SEC is like a god that can see, hear and touch everything everybody all the time.

Right. They are trying to cover their own butts. Why? Because millions of little whiny idiots have condemned ICO's and pressured the SEC to act like it has something to do with them. If you have ever been on twitter you'll notice a lot of people worried about ICO's causing harm. And yet gambling is legal all over the US in one way or another, smoking tobacco is legal, alcohol is legal... What's their point? That people are not smart enough to choose how they spend their money? We live in the information age, never before has there been a better time to buck the nearly century old laws about securities. When the laws for securities came about the telephone had only just become widely adopted...

[grinmoure]

I have not heard too much talk regarding the recent (July 25th, 2017) release of the DAO Investigative Report. It clearly states that US citizens who participate in ICOs that are considered securities can be legally held liable. I understand no charges were brought in this case in particular, but what does this mean for US citizens who invested into other ICOs?

Full report: https://www.sec.gov/litigation/investreport/34-81207.pdf
US Investors held liable:  http://imgur.com/a/IcNYx


Recently the SEC declared the DAO as securities: https://www.sec.gov/news/press-release/2017-131

Basically this means that they are subject to the agencies regulations. From their standpoint, these tokens are a form of shares and selling them without licenses violates federal securities laws. Many people who were unable to access ICOs because of geo-restrictions used VPNs. From my knowledge, the reasons ICO providers prevented US citizens from participating was to protect themselves legally from the United States government. That is true, but also note that the investor themselves can be at fault as well.

Reference this thread by Marco Santori, who is well known when it comes to law and cryptocurrency. He had this to say about the recent SEC statements. Please pay close attention to #6. Let me know your thoughts!

https://twitter.com/msantoriESQ/status/890200014370287620
https://twitter.com/msantoriESQ/status/890187373828616192

I disagree the US investors are held liable.  I am referring to the Murphy matter you cited at http://imgur.com/a/IcNYx
In Murphy the term "particpant" was referring to the actor that conducted the unregistered securities offering.  Murphy was not the investor but a participant in the illegal securities offering as an actor.  

I also don't believe that the comment #6 means your liable if you buy in an ICO that was deemed a securities offering but whether you go to resale the token that has been since deemed a security.  This is why ICO issuers are most likely barring US investors from offerings unless they feel comfortable meeting Howey test.

Full disclosure, I am an attorney practicing securities arbitration.  The foregoing is not intended to be legal advice and no attorney-client relationship is implied.

[HeRetiK]

These are just words and no meat actually. That SEC statement on ICO was more of an advisory rather than an announcement of law enforcement. SEC came up with that stand because of many concerns expressed by the many on ICO. Now, if I am a US citizen and I happen to have bought an ICO maybe all I have to do is never tell anyone about it...just pretend that the transaction never took place in the first place. I don't think that SEC is like a god that can see, hear and touch everything everybody all the time.

This was less of an advisory for token buyers, but rather a warning for token issuers. I doubt that the SEC ever considered going after individual citizens that participated in token sales. However they could go after token issuers, so restricting token sales to non-US citizens is an important move to prevent a crackdown on ICOs. Despite the decentralized nature of ICO tokens, the SEC can still go after the project team, which could harm the project's operational status and thus the value of its issued token.

[iamTom123]

I have not heard too much talk regarding the recent (July 25th, 2017) release of the DAO Investigative Report. It clearly states that US citizens who participate in ICOs that are considered securities can be legally held liable. I understand no charges were brought in this case in particular, but what does this mean for US citizens who invested into other ICOs?

Full report: https://www.sec.gov/litigation/investreport/34-81207.pdf
US Investors held liable:  http://imgur.com/a/IcNYx
Recently the SEC declared the DAO as securities: https://www.sec.gov/news/press-release/2017-131

Basically this means that they are subject to the agencies regulations. From their standpoint, these tokens are a form of shares and selling them without licenses violates federal securities laws. Many people who were unable to access ICOs because of geo-restrictions used VPNs. From my knowledge, the reasons ICO providers prevented US citizens from participating was to protect themselves legally from the United States government. That is true, but also note that the investor themselves can be at fault as well.

Reference this thread by Marco Santori, who is well known when it comes to law and cryptocurrency. He had this to say about the recent SEC statements. Please pay close attention to #6. Let me know your thoughts!

https://twitter.com/msantoriESQ/status/890200014370287620
https://twitter.com/msantoriESQ/status/890187373828616192

I disagree the US investors are held liable.  I am referring to the Murphy matter you cited at http://imgur.com/a/IcNYx
In Murphy the term "particpant" was referring to the actor that conducted the unregistered securities offering.  Murphy was not the investor but a participant in the illegal securities offering as an actor.  

I also don't believe that the comment #6 means your liable if you buy in an ICO that was deemed a securities offering but whether you go to resale the token that has been since deemed a security.  This is why ICO issuers are most likely barring US investors from offerings unless they feel comfortable meeting Howey test.

Full disclosure, I am an attorney practicing securities arbitration.  The foregoing is not intended to be legal advice and no attorney-client relationship is implied.

I am glad to see an attorney here. Please continue on sharing your opinions and ideas on this forum as it is really different to hear from someone who is more qualified to talk about securities. I agree with the fact that investors should not be held liable if they are able to buy an ICO which can be classified as a security by nature. With that issuance clarifying things once and for all as to what constitute a security, we are hoping that people can be guided and ICOs would be more scrutinized.

[grinmoure]

These are just words and no meat actually. That SEC statement on ICO was more of an advisory rather than an announcement of law enforcement. SEC came up with that stand because of many concerns expressed by the many on ICO. Now, if I am a US citizen and I happen to have bought an ICO maybe all I have to do is never tell anyone about it...just pretend that the transaction never took place in the first place. I don't think that SEC is like a god that can see, hear and touch everything everybody all the time.

This was less of an advisory for token buyers, but rather a warning for token issuers. I doubt that the SEC ever considered going after individual citizens that participated in token sales. However they could go after token issuers, so restricting token sales to non-US citizens is an important move to prevent a crackdown on ICOs. Despite the decentralized nature of ICO tokens, the SEC can still go after the project team, which could harm the project's operational status and thus the value of its issued token.

Agreed. it is no different than the SEC going after an issuer of unregistered securities in violation of the 1934 Act.  The investors lose out but should not face any civil or criminal liability whereas the actors/issuers would.

Full disclosure:
I am a licensed attorney practicing securities arbitration.  The foregoing is not intended to be legal advice and no attorney-client relationship is implied.

[grinmoure]

I have not heard too much talk regarding the recent (July 25th, 2017) release of the DAO Investigative Report. It clearly states that US citizens who participate in ICOs that are considered securities can be legally held liable. I understand no charges were brought in this case in particular, but what does this mean for US citizens who invested into other ICOs?

Full report: https://www.sec.gov/litigation/investreport/34-81207.pdf
US Investors held liable:  http://imgur.com/a/IcNYx
Recently the SEC declared the DAO as securities: https://www.sec.gov/news/press-release/2017-131

Basically this means that they are subject to the agencies regulations. From their standpoint, these tokens are a form of shares and selling them without licenses violates federal securities laws. Many people who were unable to access ICOs because of geo-restrictions used VPNs. From my knowledge, the reasons ICO providers prevented US citizens from participating was to protect themselves legally from the United States government. That is true, but also note that the investor themselves can be at fault as well.

Reference this thread by Marco Santori, who is well known when it comes to law and cryptocurrency. He had this to say about the recent SEC statements. Please pay close attention to #6. Let me know your thoughts!

https://twitter.com/msantoriESQ/status/890200014370287620
https://twitter.com/msantoriESQ/status/890187373828616192

I disagree the US investors are held liable.  I am referring to the Murphy matter you cited at http://imgur.com/a/IcNYx
In Murphy the term "particpant" was referring to the actor that conducted the unregistered securities offering.  Murphy was not the investor but a participant in the illegal securities offering as an actor.  

I also don't believe that the comment #6 means your liable if you buy in an ICO that was deemed a securities offering but whether you go to resale the token that has been since deemed a security.  This is why ICO issuers are most likely barring US investors from offerings unless they feel comfortable meeting Howey test.

Full disclosure, I am an attorney practicing securities arbitration.  The foregoing is not intended to be legal advice and no attorney-client relationship is implied.

I am glad to see an attorney here. Please continue on sharing your opinions and ideas on this forum as it is really different to hear from someone who is more qualified to talk about securities. I agree with the fact that investors should not be held liable if they are able to buy an ICO which can be classified as a security by nature. With that issuance clarifying things once and for all as to what constitute a security, we are hoping that people can be guided and ICOs would be more scrutinized.

One thing I have been researching is selling BTC on Localbitcoins.  It's very concerning that the PATRIOT Act is being applied to personal sales there and some people have run afoul of the law.  I'm biting the bullet and selling on Coinbase for the time being.

Full disclosure:

I am a licensed attorney practicing securities arbitration.  The foregoing is not intended to be legal advice and no attorney-client relationship is implied.

[Bobsrepair]

Thank you for sharing. Great information regarding the SEC and profit sharing. I wonder if voucher fall under this.