A Connecticut jury found that digital assets tied to cryptocurrencies are not securities. what a defense attorney cataloged as the world’s first judgment.
The investor of GAW miners, Stuart Fraser, was acquitted of responsibility in a fraudulent operation co-opted by ZenMiner LLC on Monday.
“It is the first case we know of in which a jury has dealt with the question of whether cryptocurrency products are securities.” one of the defendants’ representatives, Daniel Weiner from Hughes Hubbard Reed LLP.
The case against GAW Miners has been going on since 2017, when co-founder Homero Joshua Garza pleaded guilty to wire fraud. That left Fraser, a 41 percent investor in GAW, as the only remaining defendant in the case.
GAW initially sold physical mining hardware but soon partnered with it. a ZenMiner To offer remote management software that It supposedly allowed customers to control their mining hardware online.
According to the plaintiffs, the two companies never owned as much equipment as they originally claimed. Previously, both GAW and ZenMiner were found by default.
Since they could not fulfill customer orders, the two companies introduced “hashlet contracts”, the entitled their customers to a share of the profits from the company’s crypto mining.
However, in 2017, GAW was found to be selling a lot more value to computing power hashlets than it actually had in its data centers. Rather, the company used new customer money to pay older customers.
The jury decided that none of GAW’s four products, including promissory notes called “Hash Points”, tokens called “Paycoin” and virtual wallets called “Hashstakers”, were considered unregistered securities. It was also found that Fraser was not responsible.
Although the US Securities and Exchange Commission (SEC) described Hashlets as values in his previous trial against Garza, the jury found in the most recent case against Fraser that customers were actively controlling their hashlets, which meant that they could not be viewed as passive investments.