Appeals court narrows scope of landmark crypto enforcement action

A federal appeals court narrowed the scope of a long-running crypto enforcement action, holding that certain secondary-market transactions were not shown to involve the investment contract the regulator alleged.

The court left intact findings related to direct institutional sales, where written agreements set out expectations of managerial effort and future distributions.

Lawyers on both sides described the outcome as partial. The decision provides a workable distinction for exchanges listing already-distributed assets, but does not resolve how the analysis applies to tokens with active development treasuries.

The regulator said it was reviewing the opinion. It retains the option of seeking rehearing.

Legislative proposals that would assign spot-market oversight to a separate agency remain pending, and the ruling is likely to be cited by both supporters and opponents of that approach.