Ari Maccabi, a key figure with ties to Crypto World Evolution's management, is using a legal opinion penned by attorney Scott Warren to market the cryptocurrency MLM to potential investors. Maccabi promotes Warren's analysis as proof that Crypto World Evolution operates "100% legit" and enjoys "full endorsement" from the lawyer. The document itself has been kept from public view, treated as proprietary sales material, though readers have supplied copies.
Warren's January 10, 2018 memo claims the Securities and Exchange Commission (SEC) left the legal status of cryptocurrencies ambiguous in a July 2017 report. He suggests the question remained open—whether crypto needed registration or not. This interpretation overlooks subsequent pronouncements. SEC Chairman Jay Clayton issued a public statement just one month later, clarifying the agency's stance. Clayton declared that market participants must treat cryptocurrency transactions as equivalent to cash.
The chairman's guidance was direct and publicly accessible. Warren's reliance on a seven-month-old report while disregarding the chairman's explicit instructions suggests either negligence or a deliberate disregard for established facts. This raises serious questions about the rigor of his legal assessment.
The memo further attempts to differentiate Crypto World Evolution from conventional securities by emphasizing cryptocurrency's "decentralized" nature. This argument fails to account for established legal precedent. Courts have consistently held that the form or method of investment is less critical than the economic reality. If individuals invest capital with the expectation of profits generated by the efforts of others, the investment qualifies as a security.
Crypto World Evolution's operational model mirrors traditional multi-level marketing schemes. Participants invest funds, build downlines, and receive passive income. The use of blockchain technology to facilitate these payments does not alter the underlying structure or its legal implications.
Warren's analysis appears to stem from either a fundamental misunderstanding of securities law or a calculated effort to shield a dubious enterprise with a veneer of legal legitimacy. Investors should approach this memo with extreme caution.
Crypto World Evolution may be operating under the assumption that regulators will not intervene. Past enforcement actions indicate this is a risky gamble. The SEC has repeatedly clarified that MLM structures promising passive returns, regardless of the asset class involved, are considered securities. Companies like EmpiresX have faced civil fraud charges from the SEC, and other crypto-focused schemes have been targeted by regulators. The legal landscape for cryptocurrency investments has become significantly clearer, and regulatory bodies are actively pursuing those operating outside established frameworks.