Cryptocurrency Suppression Articles

Below are links (click on the underlined Part number to go to the article) to a multi-part series of articles in which we explain how the SEC has structured its anti-cryptocurrency campaign, why the SEC has over-reached its regulatory authority in attacking the creators of digital tokens and cryptocurrencies, and how to address the SEC’s actions in this area.

Part I: We introduce and describe the SEC's agency-wide program dedicated to shutting down the cryptocurrency industry: what we call the cryptocurrency-suppression program (“Suppression Program”).

Part II: We discuss specific phases and strategies used by the SEC in suppressing all forms of cryptocurrency and digital tokens.

Part III: This article discusses the concept of “private digital money” (“PDM”), explores the relationship between PDM and tokens, and, finally, compares and contrasts PDM and tokens with securities.

Part IV: We offer: (1) an historical context for the term “investment contract;” (2) an interpretational history of investment contract; (3) an introduction of the U.S. Supreme Court’s Howey test  for what constitutes an investment contract; and (4) an incipient critique of the lower federal courts’ response to the Howey test’s requirement of a “common enterprise.”

Part V: We show why the characteristics of digital tokens are not sufficient conditions to make them securities under the federal securities laws and why this causes significant, hidden problems for the SEC’s enforcement program in this area, particularly, its misapplication of the Howey case to digital tokens and cryptocurrencies.

Part VI: We show precisely why typical cryptocurrency tokens cannot be registered with the SEC as securities. When a business engages in a transaction, the accounting for that transaction must record the actual effects of the transaction in the company's financial statements. Because the SEC claims (without evidence) that the sale of digital tokens is actually a financing transaction, there is a fatal mismatch between how a cryptocurrency producer's financial statements record sales of digital tokens and how the SEC thinks they should be recorded--a view contrary to how GAAP in fact applies to such sales.