SEC goes after "nodes" and files suit against company for selling "node licenses," Node License=Investment Contract

The SEC filed suit last week against 18 people for selling "node licenses". Nodes were all the rage last year where you would buy a node license that allowed you to mine crypto. Most of these were heavily promoted on social media and were essentially scams.

DEBT Box

Debt Box was able to earn over $50 million selling node licenses. They advertised on social media and at crypto conferences. The SEC actually dug a little to come up with some of the reasoning for the complaint.

In hundreds of online videos and social media posts, as well as at investor events, the defendants told investors that the node licenses would generate various crypto asset tokens through crypto mining activity and that revenue-generating businesses in a variety of sectors would drive the value of the various tokens DEBT Box mined, resulting in exorbitant gains for investors. In reality, as alleged, the node licenses were a sham intended to obscure the fact that the total supply of each token was created by DEBT Box instantaneously using code on a blockchain.

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lied to DEBT Box investors about the revenues of the businesses purportedly driving the value of the tokens.

Node Licenses are Investment Contracts

The SEC is calling the "node software license" an investment contract. They are claiming that the crypto that the nodes were "mining" were actually not mined by the node and instead created at once by a smart contract and that saying they were mined in real-time by the node when actually they were premade is fraud (This is how many "nodes" work).

The SEC does do some useful work

As much as I am not a fan of all of the SEC's decisions and the direction they are heading, I support the SEC going after scams and scammers. They need to focus more on this. There are an insane number of scams on the blockchain each day and most regulators don't give them a second thought. The SEC should be focusing on things that are harming consumers instead of devoting their limited resources to CEX's staking programs and if Cardano is a security.

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