A U.S. court has denied an injunction lodged by the Securities and Exchange Commission against blockchain-based assets exchange Blockvest, as indicated by court documents published November 27.
The legal proceeding stemmed from a previous emergency court order initialized by The SEC in October to suspend Blockvest’s Initial Coin Offering (ICO), consequently resulting in a series of court hearings to ascertain whether or not the company’s proprietary crypto BLV tokens violated the U.S. laws governing securities offerings.
A series of investigations conducted by the securities watchdog has subsequently resulted in an initial court order issued by the U.S. District Court, temporary freezing Blockvest’s assets.
However, in the case’s latest development, the court has subsequently overruled the SEC, stating that the regulator had failed to prove that the tokens in question were classified as securities, based on the Howey Test.
As explained in the court documents:
“At this stage, without full discovery and disputed issues of material facts, the Court cannot make a determination whether the BLV token offered to the 32 test investors was a ‘security.’ Thus, Plaintiff [the SEC] has not demonstrated that the BLV tokens purchased by the 32 test investors were ‘securities’ as defined under the securities laws.”
Based on the findings Judge Gonzalo P. Curiel has ultimately dismissed the regulator’s injunction request lodged against the digital asset exchange.
This would not be the first time the securities watchdog has initialized legal proceedings against ICO operators. As per a previous Coinwire report published November 19, two cryptocurrency firms have recently settled charges filed by the U.S. Securities and Exchange Commission (SEC) over alleged violations of registration rules governing ICO securities offering.
Meanwhile, in a recent CNBC interview published this week, SEC chairman Jay Clayton has addressed recent revisions made by the securities watchdog in relation to treating ICOs and exchange-traded funds (ETFs). While Clayton mostly remained mum on the issue, he reiterated the SEC’s previous stance on the matter.