/biz/ - Business & Finance

https://qz.com/1262864/is-ethereum-is-a-security-the-answer-could-upend-the-cryptocurrency-world/
If ether is a security, what happens?
If it’s a security, then crypto exchanges are in trouble. They would have to register with the SEC, since they’d be trading in securities, and would face fines if they didn’t. The ether price would probably fall if exchanges stopped trading in it to avoid breaking securities laws.


*In March, for example, Merrill Lynch had to pay a penalty of nearly $1.8 million for brokering the sale of unregistered securities*


Will anyone go to jail?
Selling unregistered securities could land someone in prison. The Securities Act of 1933 allows for sentences of up to five years, while civil penalties range from $75,000 to $160,000 per violation for individuals, and $80,000 to $775,000 for corporate entities. These penalties are tiered, and are typically applied for each violation, so they can add up to millions.

Who could face a penalty, even if it’s not jail?
All sorts of people, from the people who came up with a token idea, to the people who received funds for the tokens, to intermediaries who promoted a token sale. Membership of a coherent group or organization isn’t necessary, as the SEC ruled in a finding against the Decentralized Autonomous Organization (the DAO) last year. In that case, the regulator found that DAO “curators,” who were supposed to review proposals for use of the DAO’s funds, were responsible for the unregistered securities sale of DAO tokens