In a much-anticipated decision with important implications for the cryptocurrency industry, a second New York federal judge has now ruled that an offeror’s use of a two-stage “Simple Agreement for Future Tokens” or “SAFT” structure for issuing cryptocurrency tokens will not suffice to exempt the offering from the reach of US securities law. In this latest ruling, the court held that social media company Kik Interactive Inc. violated US securities laws when it failed to register its 2017 sale of nearly US$100 million of its digital tokens, called “Kin,” with the Securities and Exchange Commission. SEC v. Kik Interactive Inc., 2020 WL 5819770 (SDNY Sept. 30, 2020).
In a legal update, Robert Schwinger, a partner in Norton Rose Fulbright’s New York office, and Jacob Laksin, a senior associate in Norton Rose Fulbright’s New York office, analyze the case and discuss the implications for cryptocurrency issuers.
In addition, in his most recent column in The New York Law Journal, Robert Schwinger discusses states’ current thinking on whether their legal ethics rules permit attorneys to take payment in the form of cryptocurrency, or to hold such assets in escrow or trust.
Norton Rose Fulbright has a useful database of FinTech materials for those who are interested in learning more about the subject