When Is a Token Not a Security? - Bloomberg

The US Securities and Exchange Commission began cracking down on crypto in 2017. At the time, there was a vogue for what were called ICOs, initial coin offerings, in which some crypto company or project would raise money by selling crypto tokens to public investors. The ICO promoters — the people behind the crypto project — would put out a white paper describing their project and promising brilliant innovations and huge profits, and they would sell a bunch of tokens for money. There would generally be very little in the way of disclosure or investor rights. For promoters, the ICO was attractive because it was a way to raise a lot of money from enthusiastic and gullible retail investors without following securities laws. Many, many, many ICOs turned out to be complete vaporware, either frauds or functionally indistinguishable from frauds. For the SEC, the ICO was obviously illegal: These tokens were obviously securities, and the ICOs were obviously unregistered securities offerings. (Al

The US Securities and Exchange Commission began cracking down on crypto in 2017. At the time, there was a vogue for what were called ICOs, initial coin offerings, in which some crypto company or project would raise money by selling crypto tokens to public investors. The ICO promoters — the people behind the crypto project — would put out a white paper describing their project and promising brilliant innovations and huge profits, and they would sell a bunch of tokens for money. There would generally be very little in the way of disclosure or investor rights. For promoters, the ICO was attractiv