Tokens Are Not Securities
Crypto classification, PE concealment, Elon Musk legal realism, Trevor Milton, big cowbells and SPACEs.
Programming note: Money Stuff will be off tomorrow and Friday, back on Monday.
In the late 2010s and early 2020s, you could raise hundreds of millions of dollars for a business by selling “tokens” “of” the business, tokens that were in some loose but definite sense linked to the economic success of that business. You could go around saying “we are launching the next hot crypto protocol, and it is going to be ‘a life-changing, you know, world-altering protocol that’s gonna replace all the big banks,’ and when it does that the tokens of the protocol will be worth a lot of money, so you should buy some.” People would believe you, so they would buy the tokens, from you, and then you would have money to build your business. If you built the business successfully, the tokens probably would be worth a lot of money, and the people who bought them would get a nice return on their investment.