Is it labeled as security?
No, LAT is not a security according to Howey test
Can you please explain in detail? It seems to me that it fails on almost every point. Would appreciate hearing a break-down.
Why do you think so?
The four points of the Howey Test:
- Is it an investment of money?
Yes.- Is there an expectation of profits from the investment?
ICO buyers are buying LAT knowing that the token is backed by real assets, not purchasing for anything other than a financial gain.- Is the investment of money in a common enterprise?
Yes, per the broad vertical definition of a common enterprise. "The investors are dependent upon the expertise or efforts of the investment promoter for their returns."- Are profits coming from the efforts of a promoter or third party?
Bounty program, staged discounts, etc. can fit into this category - when the end-user buys at a 15% discount from the efforts of a third party (BTT signature), they're going to be able to profit easier/differently than the market. Not quite kosher.Other red flags:
- In practice, does this idea make any sense? The "how it works" section seems to indicate that I, an asset owner, could effectively take out a mortgage on my asset (trading part of it/all of it on the exchange for $) and then effectively "buy it back" later. But with the likely shift in value of the token, how do I know what it'll cost to buy it back? It's possible that I sell half of my $500k USD house for 1000 LAT (round number for the sake of simplicity), then watch the value of 1000 LAT go from $250k USD to $1m USD. That's what I have to pay, or the custodian will auction it off? Just seems like a reckless thing to do as an asset owner.
What makes this better than working with a traditional bank?- The token sale distribution seems staged for serious market manipulation. 20% for the vague "network growth" doesn't give me confidence that the organization will allow the markets to behave normally. If I put up an asset, seems like it will be easy for the organization to pump or deflate the price to influence my ability to buy it back, while they are able to auction it off for fiat.
- Heavy time-based incentives mean that people's cost-basis for LAT is low (and all over the map), meaning that those who actually participate in the system are subject to likely downward market activity. Short term, I would expect manipulation to the downside while the organization collects real-life, hard assets.
- The Inc. press link is broken.
- The HuffPost link is to the contributor network, isn't actually a real HuffPo post. (Anyone can do this.)
Hi! Good questions! I'll forward it to our lawyers and post answer here