🧑⚖️ Gary Calls FTT Token a Security
Special holiday suprise inside!
Happy holidays, Rainmakers! 🎄
As always, I have two captivating topics for you to dive into:
1️⃣ 🧑⚖️ Gary Calls FTT Token a Security
2️⃣ 🇨🇭 INX and SICPA Form Joint Venture To Help Deploy CBDCs
Without further ado, it's time to…
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🧑⚖️ Gary Calls FTT Token a Security
This past week, the SEC released a statement announcing the charges against former FTX and Alameda Research executives.
In the press release, the SEC announced that they charged both Caroline Ellison, former CEO of Alameda Research and Gary Wang, former CTO of FTX, with defrauding investors in crypto asset trading platforms. In the SEC press release, the man himself, Gary Gensler, Chair of the SEC, made a statement in which he referred to the FTT token as a security.
When issuing securities, issuers must follow securities laws that FTX did not comply with when issuing their FTT token. As Gary pointed out at the end of his statement, by selling unregistered securities, investors are left exposed to loss, theft, fraud, and a plethora of other events that securities laws have been created to prevent.
In the United States, securities regulation is deemed by ‘The Howey Test’ and other legal precedents. The Howey Test is a legal test used to determine whether a transaction is an investment contract and hence subject to securities regulation.
The test has four criteria:
1️⃣ There is an investment of money,
2️⃣ There is an expectation of profits from the investment,
3️⃣ The investment is in a common enterprise, and
4️⃣ Any profit that comes from the efforts of a third party.
If all four criteria are met, which Gary asserts the FTT token did, the token is considered an investment contract and would be subject to securities regulation.
I’m not saying FTX issuing a security token would have avoided the issues we are seeing today. However, I know that had FTX made a compliant security token offering, the company and the bad actors at the helm would have been exposed as fraudulent much earlier than they were.
Securities laws require companies to disclose accurate and complete information. Compliance with securities law protects investors and maintains fair markets.
In the case of FTX, compliance with these laws would have required the company to disclose material information about its business and operations, which could have helped to expose the issues and risks of investing earlier on.
The SEC considering the FTT token as a security means that the token is subject to securities law and, therefore, will be dealt with by them! The fallout of the FTX scandal has already ramified throughout the cryptocurrency industry, and I’m betting that a significant securities law precedent for the crypto industry will be set from it shortly.
By the way Security Token Advisors now offers Remediation as a Service! If you believe your crypto or token may be a security and want to correct it before the SEC comes knocking, STA may be able to help. Contact Head of Consulting Alec Beckman ([email protected]) for more information!
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🇨🇭 INX and SICPA Form Joint Venture To Help Deploy CBDCs
INX and SICPA have teamed up to help governments and central banks create individual CBDC ecosystems for different countries. The Swiss joint venture combines INX's blockchain tech and SICPA's digital cash technology to create a secure and scalable environment for central banks to launch digital currencies. The goal is to address key needs such as:
💸 Financial inclusion
INX is an SEC-regulated platform for trading both cryptocurrencies and security tokens. They offer security token solutions using a combination of traditional markets expertise and disruptive fintech.
Switzerland-based SICPA is a security company that has helped protect over 180 governments worldwide and banks and other organizations against counterfeiting and fraud since 1927. They offer a range of products and services, including secure inks and holograms for documents and digital security solutions for electronic transactions and identity verification.
With all these acronyms flying around in the cryptosphere, let’s get a refresher on what a CBDC or central bank digital currency is:
A Central Bank Digital Currency (CBDC) is a digital currency issued and backed by a central bank.This means that, unlike UST, the token issued would be backed by the central bank of a company and not some company called “Terra.” A CBDC would be a digital asset that is either redeemable or pegged directly to a country's currency. According to First Post,
However, no country currently has been able to implement a widespread CBDC ecosystem. INX and SICPA joining forces is huge for governments and central banks looking for help creating some seriously advanced digital currency systems. The INX CBDC and blockchain experts team will team up with SICPA's digital squad to establish solutions that help countries strengthen monetary sovereignty and boost overall GDP.
This joint venture will tackle key requirements for central banks and their ecosystems, like compliance, scalability, cross-border transactions, and programmability. And to top it all off, SICPA's complex and advanced security features will be used in the CBDC ecosystem.
INX + SICPA = The CBDC Dream Team.
If you haven't already, check out our Security Token Show's 164th episode, which specifically covers today's topics!👇
💦 What else is Drippin’
Welcome back to The State of Security Tokens!
This year's edition is all about the biggest moves in the institutional adoption of tokenized assets, and let me tell you, it's MASSIVE. We've got all the heavy hitters you'd expect, like KKR and JPMorgan, but also some exciting new players like AllianceBernstein, Figure & Provenance, and Regulated Liability Network (RLN).
Trust us, you won't want to miss this deep dive into the world of institutional security tokens. So sit back, relax, and get ready to be wowed by all the action in The State of Security Tokens 2023 - Institutional Edition.👇
Everything in this report is for informational and entertainment purposes only. Nothing in this report should be taken as financial advice or as an inducement to purchase or sell any security. Nothing in this market report should be used as legal advice. Always do your own research before making any decisions regarding financial transactions of securities.
• No money or other consideration is being solicited, and if sent in response, will not be accepted;
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