In January 2021, the U.S. District Court docket for the Southern District of New York thought-about a movement to dismiss a category motion lawsuit filed towards Helbiz, Inc. and different defendants that involved Helbiz’s issuance of HelbizCoin, a cryptocurrency. The swimsuit included claims arising beneath United States securities legal guidelines. The Court docket granted the movement as a result of it held the cryptocurrency purchases didn’t happen in the US, regardless of computing exercise occurring in the US that made the purchases doable.
Helbiz allegedly promoted the acquisition of HelbizCoin because the unique forex that Helbiz would settle for for its Helbiz transportation rental platform. The HelbizCoins had been issued in an preliminary coin providing (ICO) to HelbizCoin purchasers in trade for fiat forex. Helbiz would then use these funds to construct out its rental platform.
Regardless of Helbiz’s alleged promise to solely settle for HelbizCoins in its rental enterprise, it in the end accepted fiat currencies as properly. That reality meant HelbizCoins by no means gained their anticipated worth. They misplaced most, if not all, of their worth. Earlier than the worth collapsed, Helbiz and different defendants supposedly bought many of the HelbizCoins they nonetheless possessed.
The court docket held that HelbizCoins met the definition of “funding contracts” beneath the Securities Act of 1933 and the Securities Change Act of 1934, and had been thus “securities” regulated by these acts. Part 10(b) of the Securities Change Act of 1934 makes it illegal to “use or make use of in reference to the acquisition or sale of any safety” a “manipulative or misleading devise or contrivance within the contravention of such guidelines and rules because the [SEC] might prescribe.” The court docket famous that the U.S. Supreme Court docket has held that for securities not listed on an American inventory trade, Part 10(b) solely ruled securities bought or bought “in the US.” HelbizCoin was not listed on an American inventory trade
The HelbizCoin providing supplies acknowledged that U.S. residents, U.S. residents or inexperienced card holders couldn’t take part within the HelbizCoin ICO. The one proof submitted of who had bought HelbizCoins had been declarations of particular person purchasers with no obvious related connection to the US. The plaintiffs however argued that the transactions had extra nexus with the US than every other nation as a result of many of the Ethereum blockchain nodes (referred to as “Ethernodes”) that validated the HelbizCoin transactions had been situated in the US. For that cause, the plaintiffs believed that Part 10(b) did apply. Blockchain nodes are computer systems that file, transmit after which confirm cryptocurrency transactions with different blockchain nodes, they usually carry out different capabilities as properly.
The court docket accepted that the US had extra Ethernodes than every other nation, however it held that reality was irrelevant as to if Part 10(b) utilized. The court docket noticed that “all that equipment for producing, administering, and delivering the bitcoin might be situated in Kansas, Germany or Brazil with out affecting the placement of the supply and acceptance of the acquisition.” (emphasis added). The court docket concluded that as a result of the acquisition didn’t happen in the US, Part 10(b) didn’t apply.
The plaintiffs’ claims had been dismissed with out prejudice to refile them within the applicable jurisdictions. Some commentators have speculated about how blockchain node geographic distribution may have an effect on jurisdictional questions. Primarily based on this court docket’s reasoning within the circumstances offered on this case, the reply is that blockchain node location is irrelevant. The choice has been appealed.
 See Barron v. Helbiz, Inc., 2021 WL 229609 (S.D.N.Y. 2021), Opinion and Order on Movement to Dismiss.
 Morrison v. Nationwide Australia Financial institution, Ltd., 561 U.S. 247 (2010).
 “. . . Ethereum is an open-source, blockchain-based, decentralized software program platform used for its personal cryptocurrency, ether.” Jake Frankenfield, Ethereum, Investopedia (Feb. 18, 2021), https://www.investopedia.com/terms/e/ethereum.asp. The Ethereum community may also assist different cryptocurrencies. See Why Most New Tokens Are Ethereum ICOs, Skalex (2017), https://www.skalex.io/why-ethereum-icos/.
 The Court docket presumably used the time period “bitcoin” colloquially in a approach to embrace HelbizCoin.
 See, e.g., John Salmon and Gordon Myers, Blockchain and Related Authorized points for Rising Markets, 63 EM Compass – IFC, a member of the World Financial institution Group 1 (2019).