SEC’s Next Target Might Be Friend.tech — Are Its Keys Securities?

• Friend.tech faces scrutiny over the classification of its keys as securities.
• Legal experts debate Howey Test application to Friend.tech keys.
• Arguments suggest Friend.tech keys may not meet the criteria for securities.

Friend.tech, a rapidly emerging social media platform in the crypto space, has come under scrutiny regarding the classification of its keys as securities and whether they should be subject to regulation by the U.S. Securities and Exchange Commission (SEC).

In an Unchained Podcast episode hosted by Laura Shin, legal expert J.W. Verret and tax specialist Jason Schwartz discussed the legal and tax implications of Friend.tech. The debate primarily centers on how will the Howey Test, a legal framework used to determine whether an investment qualifies as a security, might apply to Friend.tech keys.

The Howey Test consists of four prongs: [1]an investment of money, [2]in a common enterprise, [3]with an expectation of profits [4]derived primarily from the efforts of others. According to Verret, who specializes in securities law, Friend.tech keys might not fit this definition due to various factors.

Verret argued that Friend.tech keys lack several at…

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