Unavoidable Chun

[Unavoidable Chun @scrambler_pan]

@david_r_barrera @milesjennings @NYcryptolawyer Again, that's my point. It's such a broad term that to say there's categorically "no legal relationship" is a meaningless statement.

[Unavoidable Chun @scrambler_pan]

@david_r_barrera @milesjennings @NYcryptolawyer Again, I'm agreeing with you. I was responding to the argument that somehow there's categorically no legal relationship between a secondary purchaser and the issuer, which is clearly wrong.

[Unavoidable Chun @scrambler_pan]

@milesjennings @NYcryptolawyer @david_r_barrera And here's why I assumed he meant an ICO constituting an investment contract...

[Unavoidable Chun @scrambler_pan]

@david_r_barrera @milesjennings @NYcryptolawyer I assumed he meamt an ICO of the kind that satisfies the Howey test, but you're right that an ICO doesn't necessarily imply a security. In that case there may be another basis for a "legal relationship", but it's facts& circumstances, as usual.

[Unavoidable Chun @scrambler_pan]

@milesjennings @NYcryptolawyer Not at all, there are many avenues for a secondary market purchaser to recover, whether from an issuer, underwriter, or BD. Why do you think it's difficult?

[Unavoidable Chun @scrambler_pan]

@milesjennings @NYcryptolawyer Of course securities laws apply to private placements. They're securities! They may be exempt securities or some other form of security,but still securities.I'm now at a loss as to what point you're trying to make.

[Unavoidable Chun @scrambler_pan]

@david_r_barrera @milesjennings @wabdoteth @JasonYanowitz I think we're agreeing - I was making the same point about delegation of continuing the enterprise doesn't mean it isn't a security.

[Unavoidable Chun @scrambler_pan]

@milesjennings @NYcryptolawyer You're describing the reasonable reliance prong of Howey for investment contracts, not ALL securities. If If I issue equity it's a security, reasonable reliance and Howey aren't relevant to that classification. Howey is for one kind of security, not all.

[Unavoidable Chun @scrambler_pan]

@milesjennings @NYcryptolawyer If the issuer was required to have provided disclosure because what it issued was a security, and it just doesn't, then yes the securities laws still apply. Whether it chose to disclose or not is irrelevant.

[Unavoidable Chun @scrambler_pan]

@milesjennings @NYcryptolawyer That's just not true. An issuer is liable for securities fraud to secondary market purchasers if, just for example, its prospectus was materially false or misleading. That's the whole basis of 10b-5 class actions.

[Unavoidable Chun @scrambler_pan]

@david_r_barrera @milesjennings @wabdoteth @JasonYanowitz That's no different than having its own independent directors vote to turn it off. Just because a company can decide to go out of business or be forced into bankruptcy by others doesn't mean it hasn't issued a security.

[Unavoidable Chun @scrambler_pan]

@milesjennings @NYcryptolawyer I'm not talking about contracts at all. "Legal relationship" simply means one party has some obligation to someone else by law. Contracts are not the only source of legal relationships.

[Unavoidable Chun @scrambler_pan]

@milesjennings @NYcryptolawyer The point is there are still legal relationships involved in all of these, you're just substituting one specific relationship for another -issuer or underwriter.A security that carries no legal obligations to anyone isn't a security.

[Unavoidable Chun @scrambler_pan]

@milesjennings @NYcryptolawyer I think he means legal relationship in a broader sense. For example, if someone invests in the efforts of another in an ICO, there is an "issuer" under the securities laws, and that means a legal relationship to purchasers.

[Unavoidable Chun @scrambler_pan]

@stephendpalley Generative herring or pickled? Please be more specific.

[Unavoidable Chun @scrambler_pan]

@stephendpalley I was convinced there was a deliberately hidden haiku in there and tried for a few minutes to find it. Is misprision of haiku a felony?

[Unavoidable Chun @scrambler_pan]

@david_r_barrera @NYcryptolawyer Yes, completely agree. The original issuer and any underwriter are certainly not off the hook if they violated the secs laws. The question is, downstream, what is this thing now given that it MAY not be just a ledger entry reflecting a security transaction.

[Unavoidable Chun @scrambler_pan]

@david_r_barrera @NYcryptolawyer The premise of that hypothetical is that a token may have utility wholly unrelated to whether it was initially part of an invstmt contract. That's the difference between your ledger entry and what makes crypto a new animal.

[Unavoidable Chun @scrambler_pan]

@david_r_barrera @NYcryptolawyer Allow me a moment of reductio ad absurdum: if I buy a wrench to do wrench-things with, but a few purchases ago it was the object of an invstmt k I knew nothing about, can I sue the hardware store for not registering as a BD and selling me an unregistered security-wrench?

[Unavoidable Chun @scrambler_pan]

@david_r_barrera @NYcryptolawyer We are in agreement then - the law as it stands is sometimes perfectly clear, sometimes unclear and open to reasonable disagreement, and not infrequently completely baffling as applied to digital assets. My point is that to say "crypto is nothing new here" is patently not true.