Dragonchain Proves ICOs Are Not In The Clear
In today's YIYL we head back to the past, with ICOs, in 2017 we saw so many tokens created in a frenzy and I fell for it too, and wow what a shitshow it was and taught me plenty of lesssons. It's been 5 years and many of these scammers have rekt people and either moved on or continue on today with promises of unrekking you in the future.
But like all fiat junkies that shitcoin, they get impatient when they don't get their gains and run to big daddy government and so our story beings
ICOs are securities
The Securities and Exchange Commission has placed a lawsuit on yet another 2017 initial coin offering this time its Dragonchain. On August 16, the SEC filed a complaint against several business entities surrounding Dragonchain and founder John Joseph Roets over their presale and initial coin offering, which netted $16.5 million at the time.
The commission is calling the ICO an unregistered securities offering and is demanding disgorgement of the proceeds and a civil monetary penalty.
Through their ICO Dragonchain allegedly raised approximately $14 million from approximately 5,000 investors around the world, including the United States.
According to the SEC's complaint, the defendants marketed the offering to crypto investors, and their personnel and agents publicly discussed DRGN's investment value, pricing, and "listing" on trading platforms, among other things.
Then, between 2019 and 2022, Roets, Dragonchain, the Foundation, and TDC allegedly offered and sold approximately $2.5 million worth of DRGNs to cover business expenditures to further develop and market Dragonchain technology, some of which occurred after a state regulator found DRGNs to be securities.
Promotors are also a target for the SEC
If you think it will only be founders and seed investors who are on the hook for securities violations, you're wrong, and promoters are very much in the spotlight. Marketing firms and influencers pushing these things are only taking on short-term profits that could end them in the long run.
If you want to promote things you clearly know nothing about go ahead but if a subpoena lands on your doorstep don't come crying crocodile tears you were warned.
Government and law enforcement may be slow to react but they are clearly keen to start making examples out of certain projects and people. Despite the years going on, you don't become less guilty and eventually these things come back to haunt you.
Unfortunately, shitcoiners aren't wall street that has big law firms to protect them and are too big to fail, so I imagine plenty of them will be pinned down as the SEC starts to lay the framework for how to handle these projects and the ecosystem of grifting around it.
Do DEFI tokens fail the Howey test?
Absolutely fucking not, just because you hand out these shit like skittles on your platform for seeding capital into a pool, doesn't mean it's not an investment contract.
The premise of any DEFI token is a promise of future rewards, with a founder for the capital you provide today, that's an investment contract, that's a security.
You're kidding yourself if you think it's any different, and just because these institutions don't have the resources to take on every project, doesn't mean you'll escape unscathed either.
The way I see it is once ETH moves to proof of stake it will really be easy to police this whole drama since you can just call up the staking pools, the node operators or the stablecoin issuers to blacklist protocols that have not registered as an STO with the SEC.
So play your ape games while you can.
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