Applying The Howey Test To The DAO Tokens– On July 25, 2017, the SEC issued its Report on an investigation into an ICO and related activities by the DAO, an unincorporated entity, Slock.it UG (“Slock.it”), a German corporation, and various principals and participants. Previously in this Lawcast series I went through the parameters of the Howey Test to determine if a particular investment contract is a “security” under the federal securities laws. I also have detailed the relevant facts related to the DAO and its ICO offering. Applying the Howey Test to the DAO Tokens, the SEC notes that “money” need not include cash, but rather can be anything of value. A contribution of ETH is an investment of “money” as considered by the Howey Test. Investors in the DAO were investing in a common enterprise with the expectation of profits, including dividends and increased value. The SEC also found that the profits were to be derived from the efforts of others, including Slock.it, its founders and the DAO curators…
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