A jury will decide whether tokens issued through two allegedly fraudulent initial coin offerings (ICOs) count as securities, a U.S. district court judge said Tuesday.
Businessman Maksim Zaslavskiy is accused of violating anti-fraud and registration provisions of federal securities laws after launching two token sales that officials say defrauded investors.
He pled not guilty in early December to the charges, before moving to dismiss the cases brought by the Securities and Exchange Commission (SEC) and Department of Justice, arguing that the token sales did not constitute securities offerings. He further argued that he did not know he was in violation of the law.
In response, the DOJ and SEC claimed that Zaslavskiy knew his actions were unlawful, if for no other reason than because the SEC contacted him prior to the DRCW token sale. Furthermore, the agencies claimed that both the REcoin and DRCW tokens passed the Howey Test, meaning they fit the legal definition of securities offerings.
Zaslavskiy's trial is potentially precedent-setting, considering that it hinges on a key question: whether his issuance of tokens across two ICOs constituted illegal securities offerings.
But the answer to that question, Tuesday's hearing made clear, could take months to develop. Judge Raymond Dearie didn't rule directly on the question of whether the tokens involved are securities, kicking that question to the trial, which is tentatively set to begin as early as January 2019.
Jury members will decide "whether this is a currency or a security," Dearie remarked.
Read more:
https://www.coindesk.com/security-currency-jury-decide-next-year-ico-fraud-case/
