Federal District Court Upholds Securities Indictment for ICOs but Defers Final Howey Determination in United States v. Zaslavskiy

This week, liberal pleading standards were applied to uphold the indictment in United States v. Zaslavskiy, the first criminal case examining whether ICOs are securities under U.S. law.

  • Analyzing virtual currencies and ICOs under the Supreme Court’s test for a security in Howey involves highly fact-based questions that courts may determine are “best left to the finder of fact.”
  • The District Court made no ruling that the virtual currencies offered by REcoin and Diamond Reserve Club were securities, and application of the Court’s decision is likely limited given its narrow procedural posture and the unique facts of the case.

In the client update, we examine details of the case and how the District Court’s preview of a Howey analysis, albeit dicta, provides insight into how courts may assess virtual currencies and ICOs under the Howey test for a security in the future.