US Court Denies SEC’s Request to Classify Blockvest ICO Token as Security
A US district judge has dismissed the SEC’s request for a preliminary injunction against crypto startup Blockvest.
In an important ruling for the crypto space, a California judge last week denied the US Securities and Exchange Commission’s (SEC) request to classify an initial coin offering (ICO) token as a security.
According to court documents released on November 27, US district judge Gonzalo Curiel of the Southern District of California declared last week that the SEC had failed to provide adequate proof that the Blockvest ICO tokens (BLV) met the characteristics of a security under US law. Judge Curiel explained that the SEC case did not satisfy the Howey Test, which is the legally established methodology to determine whether or not an asset constitutes a security.
“At this stage, without full discovery and disputed issues of material facts, the Court cannot make a determination whether the BLV token offered to the 32 test investors was a ‘security,’” the documents read. “Thus, Plaintiff [the SEC] has not demonstrated that the BLV tokens purchased by the 32 test investors were ‘securities’ as defined under the securities laws.”
The SEC suspended Blockvest’s project via an emergency court order in October, with a subsequent legal battle ensuing over whether or not the BLV tokens were, in fact, unregistered securities.
Blockvest and its founder and chairman Reginald Buddy Ringgoldis have also been accused of setting up a fictitious regulatory agency — the “Blockchain Exchange Commission”. The SEC’s complaint further specified that Blockvest and Ringgoldis misrepresented their connections to an accounting firm and falsely claimed to be “licensed and regulated”. The complaint also alleges the non-existent regulatory organ criminally impersonated the SEC, mimicking its seal and using the same address as the financial watchdog’s headquarters.
According to its website, Blockvest utilizes blockchain technology to offer ‘self-managed’ digital assets through smart contracts. An ERC20-token, BLV represents shares in a portfolio and can be acquired only during the ‘Token Generation Event’ private sale.
Until recently, the ICO section of Blockvest’s website stated that the sale “has been halted until further notice”. At the time of writing, the website is under maintenance. However, the recent reversal means that Blockvest’s assets are no longer frozen as per the initial orders of the SEC and the project could go live again.