SEC v. Dragonchain

The SEC uses Dragonchain and its founder for violating Sections 5(a) and 5(c) of the Securities Act by offering and selling unregistered DRGN tokens through social media and other methods, including using crypto influencers to discuss the investment value, and used the $16 million in profits to develop a blockchain technology.

The SEC argues that the sale of the DRGN tokens meets the criteria of an “investment contract” under Howey, despite Dragonchain’s argument that DRGN tokens were “utility tokens” meant for use on its platform. This case highlights the risks faced by crypto companies that may seek to raise funds through ICOs and similar methods without registering the tokens as securities.

2:22-cv-01145