SEC's Alleging An Asset Is A Security Does Not Make It so

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By Nick Morgan and Ken Herzinger (November 24, 2021, 2:24 PM EST) — When a jury assembled earlier this month in the U.S. District Court for the District of Connecticut after a trial in Audet v. Fraser that involved fraud claims by investors who purchased something called hashlets, the very first question the jurors had to answer seemed to be simple: Were hashlets investment contracts, which would make them securities?[1]

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

Based on that,…

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