Connecticut Jury Determines Crypto-Related Products Are Not Securities

A Connecticut jury found that digital assets associated with cryptocurrencies are not what defenders are calling the world’s first ruling.

The GAW Miners investor Stuart Fraser was born on 11.

“This is the first known case in which a grand jury has decided whether crypto products are securities,” one of the defendants’ representatives, Daniel Weiner of Hughes Hubbard & Reed LLP, told Law360.

The lawsuit against GAW Mining Company has been running since 2017, when Homero co-founder Joshua Garza pleaded guilty to telephone fraud. That leaves Frazer, a 41 percent investor in GAW, the only remaining defendant in the case.

GAW initially sold physical mining hardware, but quickly partnered with ZenMining to provide remote management software that would enable customers to control their mining hardware online.

According to the plaintiffs, the two companies never owned as many devices as they initially claimed. Before that, both GAW and ZenMining were found by default.

Unable to fulfill customer orders Connecticut , the two companies introduced “hash contracts” that allow their customers to participate in the profits from the company’s cryptocurrency mining.

In 2017, however, it was found that GAW had sold far more hashlets with arithmetic value than they actually had in their data centers. Instead, the company uses money from new customers to pay old customers.

Continue reading: Josh Garza, creator of GAW Miner, wins $ 12 million for “Ponzi program”

The jury decided that none of the four GAW products contain promissory notes called “Hash Points”, tokens called “Paycoins” and virtual wallets called “Hashstakers” as unregistered securities. Fraser shall also not assume any liability.

Although the Securities and Exchange Commission identified hashlets as security in the previous case against Garza, the jury found in the most recent case against Fraser that customers actively control their hashlets, which means they cannot be viewed as a passive investment.