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by davidgerard
2437 days ago
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(author here) nah, pretty sure SAFTs are dead. The whole point of the SAFT rigmarole was to sell tokens as securities but not have them be securities on delivery, pretty much as Telegram was planning to do here - the point was not to be considered securities by the SEC. This complaint demonstrates what the SEC think of the idea, i.e. they don't care and will look at how your token actually works and whether this is an investment contract under the Howey test. But as I said - maybe Telegram will prevail in court! Do you feel lucky? |
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A SAFT allows a party to offer the delivery of tokens at some point in the future. This offering is a securities offering under US law, and therefore has to comply with the relevant regulations. In practical terms, that means filing some forms with the SEC, ranging from fairly lightweight forms if you're offering the SAFT privately without marketing, to increasingly heavy burdens if you want to market it, and the "mini-IPO" leavels of bureaucracy that would attach to a Reg A+ offering. So, it's perfectly possible to offer a compliant SAFT if you do it right.
The problem comes when the tokens are to be delivered (which was imminent, in Telegram's case). The SEC argues that not only was the SAFT contract a security, but the rights offered to Gram holders are themselves constitutive of a security, despite not being registered as such.
The SAFT is a security, but one for which Telegram appears to have been mostly compliant. The tokens themselves, which are set to be delivered to those original investors, are not registered as securities, and this is the problem, because the plan is to distribute those widely to the public, or "retail investors" as they would be regarded in the context of a securities offering.
If the Gram token were not a security, designed in such a way as to avoid triggering the Howey test, then there would be no problem (aside from Telegram's other problems, but I'm keeping the scope narrow here).
So the "SAFT is dead" argument isn't that the SAFT is automatically non-compliant, or that nobody can do a compliant SAFT offering, but instead is this: that some people in the blockchain community erroneously encouraged the belief that whilst a SAFT offering is a securities offering, the tokens that result from the investment are somehow prevented from becoming securities because the "security-ness" stuck to the SAFT itself, and that this view was wrong.
This gets tricky to discuss because the SAFT contract is basically fine, but the mistaken understanding of what a SAFT can do in practice is what allowed people to believe that selling Grams to the general public was likely to be a non-regulated activity. So, that interpretation of what SAFTs can do is dead, yes. For my part, it's not something that I ever believed, so it doesn't register as being the real news here.