ICOs seem like the most obvious and highest risk (the securities law issues arise before the coin launches at all). Trying to call it a crowdfunded product seems quite weak when there is obvious intent and expectations by nearly all participants to treat it as an investment (i.e. economic reality trumps fine print). I'm looking at you Ethereum.
In general I don't think stepping aside helps much. Whatever you did before you stepped aside is probably enough for culpability if money changed hands.
The case law says that as long as the user has managerial control then whether you sold a product enabling the user to take control, then as long as the developer has had no control, then the user entirely culpable thus the shares in the product that was sold at ICO are not a security, because there is nothing backing it. It appears you are wrong in the case that the developer steers far from any managerial control throughout the entire process. The devs could be liable for selling a faulty product if they didn't put proper disclaimers in the terms of sale, but that is orthogonal to the tokens of the product being classified as a security. Afaics, Ethereum did assert managerial control. Also perhaps one can argue that Monero's devs appear to assert managerial control (the 6 month forced upgrade thing is one potential sign of that control as who would diffuse that every 6 months if not the ongoing devs exerting managerial control, as the n00b users are totally dependent). It appears that whether the users think it is an investment or not, has nothing to do with the classification as a security. That is why I wrote in the OP to not try to apply your common sense opinion, because the law is not based on your common sense opinion.
smooth your opinion is appreciated, but I would like to point it seems to be entirely based on opinion; whereas, I cited the law (in the USA and in the EU).
In law, opinions are like ass-holes, everyone has them, but the law is something written down and appended to by case law court decisions as you know.
You claim the laws are not clear, but that appears not to be the case. The laws especially in the USA seem to use the test of managerial control. Did you even study the links and sources I provided?
http://www.lextechnologiae.com/2011/06/26/why-bitcoin-isnt-a-security-under-federal-securities-law/WHERE THE TERM SECURITY COMES FROM
A security implies an investment method or instrument that is secured against something else.
BUT IF CURRENCY CAN BE A SECURITY, THEN BITCOIN IS A SECURITY BECAUSE ITS A TYPE OF CURRENCY, RIGHT?
Wrong. Bitcoin is not really a type of currency, at least not of the type recognized as securities. No entity or assets back up Bitcoin value. Bitcoin value is entirely virtuala Bitcoin is only worth what another person thinks its worth. This is different than currency issued by countries.
Bitcoin is backed by no entity, no commodity, no organization.
SO, WHAT IS A SECURITY UNDER FEDERAL LAW?
The SEC v. W.J. Howey Co. involved the sale of units of a Florida citrus grove coupled with a service contract for farming those units. The U.S. Supreme Court ruled that this arrangement amounted to an investment contract. Investment contracts are included in the definition of securities in both the Securities Act of 19331 and the Securities Exchange Act of 19342 and are therefore subject to SEC regulations. The Court defined an investment contract as:
a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party, it being immaterial whether the shares in the enterprise are evidenced by formal certificates or by nominal interests in the physical assets employed in the enterprise.
The court in Glenn Turner borrowed a California test for determining whether something classified as a securitythe risk capital test.
The test looks at whether the investor subjects his money to the risk of an enterprise over which he exercises no managerial control. The idea behind the test is that investments of this type are the basic economic reality of a security transaction.
The test looks at whether the subjection of the investors money to the risk of an enterprise over which he exercises no managerial control is the basic economic reality of a security transaction.
So thus when there is another manager of the enterprise other than the users, then the shares of the enterprise are "investment securities". But then there is no manager and the user exercises the only management over his own shares, then the user exercise the only managerial control that exists, thus the shares are not securities! As stated in the law by the court decisions.
The European law appears to be more lax and you may not run afoul it as easily, but I argue that the same test will be applied in European law as follows... (I didn't have time to dig up European case law to confirm my logic)
It appears that securities regulation in the EU is limited to shares in companies (and certain bonds), but if you are selling coins which you used to fund development activities and you are controlling the coin ongoing, one might argue this is equivalent to a company operating an exchange which trades the shares it issued. In other words, you didn't register your company but it is still operating as a company. Thus I do think offering ICOs in Europe are potentially culpable especially as EU totalitarianism proceeds with the sovereign debt collapse the push to federalize the governance and taxing power to Brussels as a "solution" to the ("incorrigible nations") debt crisis, i.e. the member nation debts need to be consolidated thus fiscal policy and thus law needs to be consolidated (the Euro was the Trojan horse to full integration of sovereignty). Does anyone think this interpretation of potential risk is ludicrous and if so then why?
Perhaps a securities case will be brought as part of a class action lawsuit, such as if Ethereum investors become disgruntled.
http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=1472&context=ilj#page=9http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31989L0298:EN:HTMLCouncil Directive 89/298/EEC of 17 April 1989 Section 1, Article 2: 2(e) 'transferable securities' shall mean shares in companies and other transferable securities equivalent to shares in companies, debt securities having a maturity of at least one year and other transferable securities equivalent to debt securities, and any other transferable security giving the right to acquire any such transferable securities by subscription or exchange;