Every argument that I have seen focuses on the underlying asset – the crypto itself – rather than the agreement to buy and sell it. That agreement, not the thing being bought and sold, determines whether it is an “investment contract” and thus a “security.”
If the underlying asset was the defining (or even a significant) factor, then Howey wouldn’t exist in the first place.
Example:
I’m sitting in the barber shop. It’s a low frills, low maintenance kind of place – no appointments. And guys like me love it. I got here 10 min before it opened and there were 2 people in front of me. Almost an hour later, there are 5 people waiting, including me. Not complaining, just setting up the investment contract hypo.
When the 5th guy came in I joked that I would sell him my place in line. That’s not an investment contract, but let’s make it one.
“Hey buddy, here’s the deal: I make $8/hr, you make $20. You’re losing money every minute you sit here. I’ll sell you my place in line for $16. But, it gets better. I’ll go out and look for someone who makes $30/hr and try to sell the place in line to him. You’ll get the proceeds of that sale, minus my brokers fee. Standard disclaimers apply”
If I repeat that process enough times it’s an investment of money with buyers expecting a profit from my efforts, ie an investment contract.
The more interesting (and maybe better) argument is that the court can only consider the contract itself, and not statements outside the contract, in determining whether the agreement to buy and sell crypto assets is an investment contract. In most of the briefs and opinions I have seen, the arguments focus on statements and actions outside of the actual agreement between buyers and sellers. I don’t think I’ve ever seen a discussion of the terms of the agreement to buy and sell crypto. Everything focuses on marketing and promotional materials.
To be sure, such statements are relevant to the question of fraud, but arguably do not form part of the (investment?) contract.
Capto Crypital 