A magistrate judge in Florida issued a report in a class action lawsuit – Rensel v. Centra Tech, Inc. – finding that tokens issued and sold by tech startup Centra Tech were investment contracts. While the report and its recommendations are not final until approved by a district court judge, it appears to be the first judicial finding that a company’s issuance and sale of tokens through an initial coin offering (ICO) must comply with federal securities laws.

Deborah R. MeshulamBenjamin Klein and Richard Kelley outline the background and procedural history of this report, the application of the Howey Test to CTR token sales and the impact and implications of the judge’s findings. Click here to read more.