Connecticut jury finds crypto-related products are not securities

Once again, the question of whether digital assets constitute securities is under question. Read the full article by: Keira Wright

Key Points:

• Stuart Fraser was cleared today of his liability in what Connecticut called a fraudulent operation involving ZenMiner LLC. The jury ruled that the digital assets linked to their cryptocurrency offerings are not securities.

• This case has been going on since 2017 after the Co-founder of GAW Miners plead guilty to wire fraud. GAW and ZenMiners originally partnered up to offer clients remote management software to control mining hardware.

• The issue that arose from this was that both companies did not have as much mining equipment as they claimed in their offerings to clients. This is when the two companies decided to offer “hashlet contracts” which gave customers a share of the mining profits.

• The issue here was that they were using the money from new customers to pay off the old ones which is why Homero Joshua Garza of GAW miners is still guilty of fraud.

• Fraser; however, is now cleared in his part of the case since the jury ruled that customers were actively controlling their “hashlets” therefore it couldn’t be considered a passive investment.