Thread by @JohnEDeaton1

“INVESTMENT CONTRACT”

Is one of the most misunderstood legal terms in the law. The Howey Test must be the most misapplied legal test or doctrine on social media.

“Investment contract” is a legal term of art adopted from state law by Congress when it enacted the 1933 Act.

According to the Securities Act of 1933, the term ‘‘security’’ means:

“any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement,

collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of de- posit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle,

option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign

currency, or, in general, any interest or instrument commonly known as a ‘‘security.”’

DIGITAL ASSET IS NOT LISTED. SOFTWARE CODE IS NOT LISTED.

In all of these digital asset SEC cases (@Telegram, #Kik, @LBRYcom, @Ripple) the only relevant term is “investment contract.”

And the Supreme Court in the Howey case in 1946 defined what constitutes an investment contract.

A digital asset or cryptocurrency (software code), STANDING ALONE, is NOT a security. It can be marketed, packaged, offered and/or sold as an investment contract aka a security.

In Telegram it was made clear that the #GRAM token was NOT the security. #XRP is NOT a security. #ETH is NOT a security.

The #ETH ICO constituted an unregistered securities offering. Ripple may have offered or sold #XRP as an unregistered security on a specific occasion(s).

But even if true, it doesn’t make the underlying asset - digital code - a security itself.

Most important: when dealing with an investment contract, there hasn’t been a single case in U.S. history where the secondary sale of that asset was also found to be a security. NEVER.

When the investor in Howey bought the 🍊 grove, he bought it directly from the Howey Company. If that same investor had sold the 🍊 grove to a second buyer years later, a buyer with zero knowledge of the Howey company and its involvement, the subsequent sale is not of a security.

It doesn’t matter that the #ETH ICO was a securities offering - #ETH itself isn’t a security. It doesn’t matter if Ripple sold #XRP as a security sometime between 2013-2018 - #XRP itself isn’t a security.

Every Altcoin arguably starts out as a security when its first distributed, ICO or not. When Satoshi was the only miner of #Bitcoin (or one of a few) and had he offered 100K #BTC for sale for $100K USD, it would have been an unregistered securities offering.

The industry can’t allow Gensler and the SEC snd #BTC Maxis to keep pushing an unconstitutional shortcut by calling the tokens themselves as securities.