The judge in the case which was held in Brooklyn, New York gave a ruling which stated that ICO disputes can be considered under security laws. The case was against an individual who was promoting the digital currencies. The investors had filed a case stating that the assets which he claimed that the tokens were backed by, like real estate and diamond did not exist actually.
A big win for the Federal prosecutors:
The Judge finally gave a ruling that ICOs can be considered under the securities law. This will ensure that ICOs are not able to go about their shady business quite easily. Moreover, this classification will open up doors for further litigation as well. This will significantly protect the investors in the future. This will also mean that the shady ICOs will no longer be allowed as well. There will be legal reprecussions of launching a shady ICO as they can now be covered under the securities law.
According to Judge Dearie, the defendant actually offered an investment opportunity. This investment opportunity was a scam. According to the order, not only it can be considered a financial fraud but ICOs can be regulated under the securities law. This ensures that the ICOs which are being launched in the United States can easily be now considered as securities. In case, the investors have any dispute with the company launching the ICO, they can easily file lawsuits according to the securities law. This ensures that companies will have to abide more carefully with the securities laws. Only when there are sure that they are abiding by all the rules and regulations, they will actually be able to go ahead and launch the ICO.
Is it the end of the road for shady ICOs?
Also, this clearly means that the shady ICOs can no longer be launched as well. When the shady ICOs can no longer be launched, it will become much easier for the investors to actually invest in the companies which are launching the ICOs. Moreover, there will be legal reprecussions for the companies which are launching shady ICOs. That is why the investors will not lose money in such ICOs.
At the same point in time, this will open up the ICO sector to excessive litigation as well. This is a downside. However, keeping in mind the kind of money which the investors have lost in ICOs, this move should be welcomed by the investors as well as the cryptocurrency industry. Only when there is a proper legal framework to deal with such disputes as well as fraud ICOs, the investors will be able to invest in the ICOs with peace of mind.
This ruling is surely a landmark judgment by the US Court.