Could Avorak AI and Bitcoin Be Labeled Securities in the Future?

Recent moves by the United State Securities and Exchange Commission (SEC) have caused immense FUD (fear, uncertainty, and doubt) in the crypto community. Investors question whether Avorak AI (AVRK) and Bitcoin (BTC) could be labeled securities in the future.

What is Avorak AI?

Avorak AI is an innovative AI platform built on the BNB Smart Chain, offering a wide range of AI products and services through the blockchain. One of its notable products is Avorak Write, a text-generating AI. Unlike most text-generation models that rely solely on internet scraping, Avorak Write utilizes a combination of mechanisms, including a pre-written language bank and plagiarism-detection APIs. This ensures the production of original and high-quality texts, enhancing the value and reliability of Avorak AI’s offerings.

Avorak’s native utility token, AVRK, is an indispensable part of how it delivers products and represents a commodity of value only with the purpose of accessing its ecosystem. Avorak has allocated 5% of the total AVRK supply (40 million) to primary locked staking pools so that users increase their percentage hold of tokens through three pools. AVRK is selling at $0.255 in phase 7 of Avorak’s initial coin offering (ICO). This is the second-last phase, and it offers a 4% token bonus, priority access to Avorak’s closed beta products, and several other benefits.

Avorak AI has demonstrated a commitment to safeguarding customer data and ensuring compliance with applicable regulations. And crypto analysts who have reviewed it suggest it has great potential for growth.

Why is Bitcoin labeled a security?

Bitcoin (BTC) has garnered significant attention and sparked debates within the financial and regulatory spaces. Some critics argue that Bitcoin should be labeled as a security based on the principles of the Howey test. They point to the fact that the base protocol of Bitcoin is controlled and frequently altered by a centralized entity, that is, the core developers and proponents operating behind the scenes. They suggest that this control resulted in at least one major forking event, leading to the re-issuance of all existing Bitcoin (BTC). These critics contend that the only exception to this security label is Bitcoin Satoshi Vision (BSV), as it boasts a locked protocol that effectively prevents control, re-issuance, and manipulation by any entity or group, whether hidden or apparent.

However, it is important to note that despite these arguments, the U.S. Securities and Exchange Commission (SEC) and its chair, Gary Gensler, have stated that Bitcoin is not classified as a security.

What is a security in crypto?

A security is a financial instrument that represents ownership or a stake in an entity and is designed to provide investors with ownership rights, profit-sharing opportunities, or the expectation of future returns. In crypto, securities may represent shares in a blockchain-based project, ownership stakes in a company, or rights to certain assets or revenue streams. Crypto securities can take different forms, such as equity tokens, debt tokens, or investment contracts. The classification of a digital asset as a security subjects it and its issuers to regulatory requirements imposed by financial authorities. These include compliance with securities laws, registration with appropriate regulatory bodies, disclosure of relevant information, and adherence to investor protection measures.

Nonetheless, the determination of whether a specific cryptocurrency qualifies as a security depends on various factors, such as its underlying structure, the rights it confers, the manner of its issuance, and the jurisdiction in which it is offered. The regulatory landscape surrounding crypto securities is still evolving, and different jurisdictions may have varying interpretations and approaches to classifying and regulating these assets.

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