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Court Rules Against SEC to Find ICO Not a Security

Court Rules Against SEC to Find ICO Not a Security

Author: Dan BrecherDate: January 4, 2019

A federal court recently ruled that digital assets sold in an initial coin offering (ICO) did not meet the definition of “security.” It is the first court decision against the Securities and Exchange Commission (SEC) on this issue, suggesting the analysis might not always be as clear-cut as the SEC maintains.

In October, the SEC filed a Complaint against Defendants Blockvest, LLC and Reginald Buddy Ringgold, III a/k/a Rasool Abdul Rahim El alleging violations of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5(b); fraud in violation of the Securities Act of 1933 (Securities Act); and violations of Sections 5(a) and 5(c) of the Securities Act for the offer and sale of unregistered securities. Defendant Reginald Buddy Ringgold, III (Ringgold), is the chairman and founder of Defendant Blockvest, LLC (Blockvest). The SEC complaint alleges that Defendants have been offering and selling alleged unregistered securities in the form of digital assets called BLV’s via an ICO.

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