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Investors in HelbizCoin have won a court ruling in a class-action lawsuit against the project that questions the project’s status as an unregistered security.
The lawsuit was initiated by HelbizCoin investor Marshall Ward in March 2019, with Ward investing $50,000 in HelbizCoin as part of its ICO in March 2018. Ward’s lawsuit was related to the US Securities and Exchange Commission’s Howey Test, which is regularly used to determine if a product qualifies as an investment contract, and therefore a securities.
According to the ruling, which was handed down by the United States District Court of the Southern District of Florida on June 4, 2020, the HelbizCoin project meets all four criteria required for a product to qualify as an investment contract, and is therefore an unregistered security.
The ruling is significant as it sets a precedent for how other projects conducting ICOs can be seen legally. The ruling may lead to the SEC taking further action against HelbizCoin, or potentially, other projects that have conducted ICOs.
In addition, the ruling is likely to encourage other investors to file class-action lawsuits against projects they believe have issued unregistered securities.