A US federal judge has officially ruled that the ATB Coin is unregistered security despite the fact that the token didn’t let buyers make any profit. Following the latest altcoin news, we read more about this court precedent.
Stephen D. Palley, a US lawyer wrote more about this decision on the Block Crypto. It turns out that security is something that gets its value from the efforts of others or is a common enterprise. Security also has actual money invested in it. The ATB coin initially launched two years ago but its value struggled to gain value. The altcoin dropped by 80% since its launch so the lawsuit is based on those losses. ATB proprietors submitted a motion to dismiss due to not being entitled to profits from the company.
Here is how the court made the precedent. If you don’t get your profits in an ICO investment, it can still be considered as security. The court decided that the ATB Coin is guilty of not delivering its promises and offering unregistered security. The court looked into the materials from the ATB Coin company. It looks like it still runs on an active blockchain with zero real use. It also trades at no reputable exchange with a total volume of less than $5 million.
The other argument by the defendants was that the court has no jurisdiction. However, the court can assert jurisdiction if US citizens can invest in something. But, to justify the authority, the court noted that one of ATB Coin’s founders Herbert W. Hoover is a New York resident.
The court also relied on one of the SEC’s agreements from the Muchee ICO case. There the court found that something can be considered security even when profits are not promised. The SEC is a regulatory agency but has authority from the administrative branch. The decision by the SEC and Munchee is also a precedent over other cases.
The judge wrote in the dismissal:
‘’Such a formalized profit-sharing mechanism is not required for a finding horizontal commonality.’’
In 2017, most of the ICOs were unregistered with the SEC and had US investors. This only proves that if the case against ATB Coin reaches its final point, it could mean a serious precedent for dozens of projects that have to return real value to ICO investors.
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