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Amicus Briefs

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NFI Position:  Like other crypto-related litigation, this case requires the simultaneous examination of a finance question (Are the secondary market crypto purchase transactions investments?) and a legal question (Are such transactions investment contracts?) Thus, proper application of the law warrants the interdisciplinary lens of finance. Determining the boundaries of investor protection, after all, would be a difficult task unless a consensus can simultaneously be established on the definition of the term investing. 


NFI answers the finance question with a “no,” and the legal question with a “yes.” At first glance, it may seem implausible to reach the legal conclusion of an investment contract in the absence of both an investment (once the term investment is properly defined), and a contract. That potential discomfort, if any, fully goes away under a legal refinement of Howey. More specifically, the refinement proposed in this brief is based on fundamental principles of finance (“Modified Howey”), an approach that provides a clear bridge from finance to law. Under this proposed refinement, NFI rejects the popular, but ultimately incorrect view that Howey is a conjunctive test, necessitating the satisfaction of all four prongs, at all times. Instead, NFI contends that Howey is meant to be a flexible framework that becomes relevant depending on both the type of asset and the circumstances under which the asset is sold. 

Basically, under the modified Howey approach, the flexibility bestowed to the test by the Supreme Court is not just how many fact patterns it can be applied to, but how it can be applied. Under the modified Howey approach, the Howey test turns into a set of toggles that can be turned on or off based on the economic realities of the transaction.

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