In Blockvest Case, Court Reconsiders and Finds Digital Assets Were Securities

Fenwick securities enforcement co-chair Michael Dicke spoke with The Recorder about the latest development in SEC v. Blockvest, a cryptocurrency case that could provide further guidance to a number of novel legal questions.

Judge Gonzalo Curiel of the Southern District of California had denied a prior SEC request for a preliminary injunction after finding the agency had not provided enough information to deem Blockvest’s token a security.

Last week, Judge Curiel granted the SEC’s request for reconsideration, and ruled that the SEC had met its burden of showing that the tokens offered and sold by Blockvest were part of an unregistered securities offering. The court focused heavily on Blockvest’s statements in its white paper and marketing materials that stated purchasers could share in the profits of the enterprise, a common hallmark of a securities offering.

Dicke, formerly the head of enforcement for the SEC’s San Francisco regional office, told The Recorder that despite the court’s ruling, he expects to see defendants continue to push back against the agency’s determination that certain ICOs are securities offerings because each case is so fact specific.

“The ‘Is it a security analysis?’ vexes even the most seasoned securities lawyers. It’s not [a] straightforward analysis,” Dicke said.

The full article is available through The Recorder (subscription required).

To learn more about recent SEC activity, see Dicke’s previous articles on the Blockvest decision and the SEC’s first ever enforcement actions against cryptocurrency firms for failing to register as a broker-dealer and an investment company.


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