US Judge Argues Centra Tech Tokens are Securities

Tokens are Securities

A Southern District Court judge in Florida produced a report arguing why Centra Tech’s ICO tokens should be classed as securities.

Hit with a class-action lawsuit for violating US securities law, several of the Centra Tech team members already currency signals face prosecution by the US Government — having had 91,000 Ether seized from the project’s ICO wallet.

The new report’s findings, however, may see the Floyd Mayweather-backed Centra Tech endure further legal ramifications.

Lodged by Chief Magistrate Judge Andrea Simonton, the report summarizes and analyzes the arguments of several plaintiffs — who allege that US securities law was violated during Centra Tech’s $32 million token sale.

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According to the report, the legal definition of a security is as follows:

“The definition of security under the Securities Act includes “investment contract(s).” “An offering is an investment contract if there is: (1) an investment of money (2) in a common enterprise, (3) with the expectation of profits to come solely from the efforts of others.”

On the basis of this definition, Simonton asserts that Centra’s tokens fulfilled all three requirements of a security. In essence, she recognizes that the CTR token was purchased as an investment — one that would produce profits or losses for investors based purely on the performance of Centra Tech.

In summary, the report states:

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“Therefore, the offering of Centra Tokens was an investment contract under the Securities Act, such that the Defendants sold or offered to sell securities by virtue of the Centra Tech ICO.”

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While Centra openly disputed CTR’s status as a security, the team did not defend this argument in court. They have, however, “indicated an intention” to battle this in the future.

The report will carry no legal bearing over similar proceedings. However — as US-based blockchain lawyer Stephen Palley points out — it may be used as a legal writing that aids related arguments.

A more pressing concern may be the outcome of the Centra Tech case itself – which could become the textbook cryptocurrency security argument.

The post US Judge Argues Centra Tech Tokens are Securities appeared first on CryptoSlate.

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