Appeals court narrows agency authority over secondary token sales
The panel held that resale on an anonymous order book does not automatically carry the promises made at issuance.
A federal appeals panel has narrowed the reach of an agency's authority over secondary-market token transactions, holding that a buyer on an anonymous order book does not necessarily receive the promises that accompanied the original distribution.
The opinion is careful about its own limits. It does not disturb the treatment of primary sales, and it expressly leaves open whether continuing promotional statements by an issuer can revive an investment-contract analysis downstream.
Defence lawyers who reviewed the ruling for DC10AUDIO described it as significant but narrow, useful mainly to defendants whose conduct is confined to secondary trading.
The agency has not said whether it will seek rehearing. A circuit split on the same question remains unresolved, which litigators say makes eventual Supreme Court review more likely than not.
Several pending district-court matters have already been stayed pending clarification.
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