US Judge Concurs With SEC: Centra Tech Token Is A Security

US Judge Centra Tech

A judge from Florida’s district court ruled that Centra Tech’s token is a security, in concurrence with the US Securities and Exchange Commission (SEC), which classified the tokens as securities as well.

Judge Andrea Simonton of the Southern District of Florida ruled that tokens sold in Centra Tech’s ICO are securities. Judge Simonton penned a detailed explanation in her ruling of how the firm’s token demonstrates the aspects of a security under existing laws.

Judge Simonton, in explaining her ruling, quoted from the Howey Rule. She says the token satisfies all three criterion for a security that the Howey Rule outlines, and is, therefore, a security.

According to the ruling, the definition of a security includes:

“(1) an investment of money (2) in a common enterprise, (3) with the expectation of profits to come solely from the efforts of others.”

Judge Simonton continues, saying:

“Because the success of Centra Tech and the Centra Debit Card, CTR Tokens, and cBay that it purported to develop was entirely dependent on the efforts and actions of the Defendants, the third prong is satisfied. Therefore, the offering of Centra Tokens was an investment contract under the Securities Act, such that the Defendants sold or offered to sell securities by virtue of the Centra Tech ICO.”

While it is not yet clear what precedent the ruling sets for similar court cases, the ruling may get cited in other legal cases asking whether tokens count as securities.

According to the court documents, the defendants are not challenging the ruling. Unlike the case against Centra Tech bought by the SEC, this court decision is part of a lawsuit filed by investors in the firm who claim they lost money due to the unregistered securities sale.

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