The SEC alleging that an asset is a security does not make it so

By Nick Morgan and Ken Herzinger (Nov. 24, 2021, 2:24 p.m. EST) – When a jury convened earlier this month in U.S. District Court for the District of Connecticut after a trial in Audet v. Fraser involving allegations of fraud by investors who bought what are known as hashlets, the very first question jurors had to answer seemed to be straightforward: Were hashlets investment contracts, which would turn them into securities. ?[1]

The reason this question should have been a slam dunk for the plaintiffs is that the United States Securities and Exchange Commission had already filed a complaint in 2015, SEC v. Garza, in which the SEC specifically alleged that the hashlets were securities.

Based on this, …

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