Thanks for stopping by to read our article Is Cryptocurrency a Security? Keep reading and we will be providing you giving you ALL the details on the MLMs cryptocurrency companies offering securities.
Regardless of the presence of a grey area with regards to MLM cryptocurrency companies and investment, we've maintained they are still securities.
Is Cryptocurrency a Security?
Be it Ponzi points like OneCoin or pump and dump altcoin tricks, there are affiliates contributing genuine cash on the confirmation of a uninvolved ROI; or at the end of the day, the exacting significance of a security in relation to cryptocurrency.
Other than an enforcement action a month ago on a fake bitcoin trading scheme, to date both the SEC and FTC have been on regulation of the MLM cryptocurrency niche.
Following an investigative report into the “sales of digital assets cryptocurrency by “virtual” associations”, the SEC has concluded cryptocurrency is in fact a securities offering.
The SEC's investigative report analyzed the sale of tokens and cryptocurrency “Starting Coin Offerings” (ICOs).
It’s a fact that this year specifically the MLM industry has been overwhelmed with cryptocurrency offerings, a large number of which are controlled by and pitched to US residents.
Crowdfunding
Going by many names, one common justification for regulatory exception is that it is crowdfunding.
A particular occasion the SEC analyzed was the sale of DAO cryptocurrency tokens for Ether;
The DAO cryptocurrency has been depicted as a “crowdfunding contract” yet it would not meet the requirements of the Regulation Crowd funding exemption on the grounds that, in addition to other things, it was not a broker-dealer or a funding portal registered with the SEC and the Financial Industry Regulatory Authority.
Rather the SEC reasoned that DAO token cryptocurrency were securities and that those investing were for indeed classified as investors according to the Securities Exchange Act.
This was primarily ascertained on those investing doing as such “with the sensible desire of profits got from the managerial efforts of others”.
While the DAO cryptocurrency offering itself wasn't a MLM opportunity, obviously the same applies to any MLM token-based cryptocurrency offering as the fundamental standards are the same.
SEC registered MLM cryptocurrency companies
To date we are not aware of a single MLM cryptocurrency organization enlisted with the SEC.
“The inventive innovation behind these virtual trades does not avoid securities offerings and exchanging stages from the administrative framework expected to shield speculators and the respect of the business divisions,” said Stephanie Avakian, Co-Director of the SEC's Enforcement Division.
Regardless of $150 million USD raised by means of investment into DAO cryptocurrency, the SEC as of now is not taking any further action.
In light of the facts and conditions, the agency has chosen not to press charges in this situation, or make discoveries of violations in the Report, yet rather to caution the industry and market members: the federal securities laws apply to the individuals who offer and sell securities in the United States, in any case whether the issuing entity is a traditional company or a decentralized self-governing association, in any case whether those securities are purchased utilizing U.S. dollars or cryptocurrency, and regardless of whether they are taken in certificated frame or through circulated ledger technology.
While the conclusion of the investigative report may not have brought about any charges, what's of far greater significance is what it means for the MLM industry and cryptocurrency going forward
SEC registration is mandatory
In case you're in a MLM cryptocurrency company of any sort working within the US as well as being pitched to US residents, SEC registration is mandatory.
No ifs or buts, you're taking an interest in a securities cryptocurrency offering and failure to register with the SEC constitutes an unregistered securities offering.
This is a violation of the Securities Exchange Act and, in case of regulation by the SEC, will see the company and you as a promoter held accountable the same as any other Ponzi scheme.
Actually we believe that while this is a welcome clarification from the SEC, it's additionally long past due. We would ballpark estimate that around half of MLM opportunities we review nowadays include a cryptocurrency offering, in light of a perceived notion that securities regulation doesn't have any significance.
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