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Friend.tech, a new social media platform in the cryptocurrency world, is being examined to determine if its keys should be considered securities and regulated by the U.S. Securities and Exchange Commission (SEC).

In a recent Unchained Podcast episode hosted by Laura Shin, legal expert J.W. Verret and tax specialist Jason Schwartz discussed the legal and tax implications surrounding Friend.tech. The debate primarily focuses on whether Friend.tech keys could be considered securities under the Howey Test, a legal framework for assessing if an investment qualifies as a security.

The Howey Test consists of four criteria:

[1] an investment of money, [2] in a common enterprise, [3] with an expectation of profits, and [4] derived primarily from the efforts of others.

Verret, a securities law specialist, suggested that Friend.tech keys might not meet this definition due to several factors.

Verret argued that Friend.tech keys lack many typical attributes associated with traditional securities, such as voting rights, dividends, and liquidation rights. He also pointed out that the common enterprise element isn’t straightforward, as keys mainly provide access to chat rooms rather than pooling assets for profit.

Schwartz added to the discussion by mentioning the emergence of wrapped Friend.tech tokens, which are ERC-20 tokens representing keys. The debate considered whether these wrapped tokens might be seen as securities due to potential secondary market trading. However, Verret suggested that the absence of direct financial contributions to key creators could work in favor of not classifying them as securities.

Friend.tech, a fast-growing platform in the cryptocurrency space, has garnered significant attention since its August 2023 launch. Essentially, Friend.tech allows users to purchase keys (formerly known as shares) that grant access to chat rooms moderated by friends. The price of keys is determined by a bonding curve, and key holders can redeem them for the current market price, introducing a financial aspect to the platform.

Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

#Bitcoin #CryptoNews #cryptomarket #Friendtech #SEC

CryptosHeadlines.com - The Leading Crypto Research Network

DJ and crypto investor 3LAU leaves Friend.tech due to regulatory concerns, sparking discussions in the crypto community.

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On September 15, 2023, 3LAU, a DJ and crypto investor, posted on X about his decision. He praised Friend.tech as a great product but had worries about its regulatory challenges. Due to these concerns, he chose to leave the platform.

Additionally, he mentioned his plan to donate around 8 ETH earned from Friend.tech to a music-focused charity called the Paid In Full Foundation, something he deeply cares about.

3LAU had a significant concern regarding Friend.tech’s automated market maker (AMM) system. This system lets users trade user keys (formerly shares) on the platform, essentially allowing people to trade their social media presence.

However, 3LAU felt that this feature operates in a regulatory gray area, which could potentially create problems for users down the road. While he didn’t see the risks as extremely high, he believed it was his responsibility to stay away from areas with unclear regulatory rules.

3LAU’s Decision to Distance from AMM and Addressing Concerns

3LAU made it clear in his statement that he didn’t want his brand linked to an AMM in this particular context. This choice sparked a strong reaction on social media, with some people supporting him and others criticizing the DJ.

Interestingly, some users accused 3LAU of selling his keys, which could potentially have a negative impact on his followers or be seen as a way to exit the platform. However, 3LAU quickly addressed these concerns by stating that he would refund anyone who had bought his keys.

Navigating Decentralized Social Media and Crypto Responsibly

Friend.tech, launched in mid-August, allows users to turn their social presence into tokens by buying and selling keys. These keys carry financial value and can change in worth due to various factors, making it challenging for users looking to leave the platform.

3LAU has outlined his plan to compensate Friend.tech key holders and minimize any initial issues. He suggested using a split contract to distribute ETH earnings to key holders pro-rata, starting from the first key sale block. He also reiterated his commitment to donating the key’s value to charity.

This situation underscores the importance of responsibly navigating the evolving regulatory landscape of cryptocurrencies and decentralized social media. 3LAU’s actions reflect a responsible approach to addressing concerns related to exiting such platforms.

Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

#Blockchain #Bitcoin #CryptoNews #cryptomarket #Friendtech