Safex Bittrexit

Recently there has been an announcement on regarding the Safex/Btc trading market that it is going to be delisted by December 15th, 2017.

In light of this sudden situation I will publish legal analysis that describes Safex and that it is not a security.

Keep reading “Legal Analysis of Safex as a Security” below for detailed explanation how Safex is not a security.

The Safex “Dividend Red Flag”

Despite the terms “dividend” that had been used throughout the communication of late with regard to Safex and its “dividend” calculator, this in no way qualifies Safex as a security.

Safex is not an investment holder nor is it a company. Therefore, this “dividend” is not and never could be a part of a profit, but only as an incentive for holding the coin.

Going Forward

The recent events have spawned a huge opportunity for new exchanges to become a flagship for trading in Safex Tokens. Additionally, as communicated in the past that there are other trading partners who are in progress to adopt Safex for trade on their exchanges with more provisions for entering Fiat Money into our market in the next months ahead.

I expect that this analysis is adopted by any new trading partners to the Safex community and that those exchanges do not see a precarious circumstance around the Safex Model.

Keep reading “Legal Analysis of Safex as a Security” below for detailed explanation how Safex is not a security.

Legal Analysis of Safex as a Security


  1. The Safe Exchange Coin (“SAFEX”) is not a security under the definition of any common type of security or within the broad definition of “investment contract” that the Supreme Court articulated in Howey.
  2. A sale of the SAFEX is not an investment contract because a purchase of SAFEX does not constitute an investment in a common enterprise and the users of SAFEX must not expect to receive profits from the SAFEX holdings based on any efforts of the sellers.
  3. Therefore it is conclusion that listing SAFEX on an exchange does not, at the time of this paper, constitute effecting transactions in securities for the accounts of others or for itself under The Securities Exchange Act.

1.1 Description of the SAFEX

SAFEX is using the Bitcoin Blockchain as its public ledger via the Omni protocol. It is #56 in the series of Tokens deployed using the omni protocol.

The SAFEX is a decentralised, peer-to-peer digital payment network. The users of SAFEX power its existence and there is no central authority involved in powering SAFEX. The transactions of payment in SAFEX do not require any third-party and are the result of peer-to-peer transactions. In particular no third party is required to effect, validate, and settle a transaction in SAFEX.

The network of SAFEX relies on blockchain technology using a decentralised public ledger to process and validate transfers of SAFEX. The network applies principles of cryptography to process every transfer by validating it and registering every transaction within its decentralised public ledger.

The public ledger (blockchain) which is visible to all computers participating in the SAFEX network verifies the event of a transfer and the amount of SAFEX transferred between a user transferring and a user receiving SAFEX. The identity of the parties involved in a transaction are not revealed and the identity of each user is encrypted.

2.1 Evaluation of the SAFEX under the Securities Act

2.2. The Section 2(a)(1) of the Securities Act provides:

“The term “security” means any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security”, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

2.3 SAFEX as a “stock”.

a) While SAFEX, similar to a stock, is transferable and has potential to appreciate and depreciate in exchange value, this ends the list of similarities between SAFEX and a stock. SAFEX does not carry any right to participate in a dividend distributed by an issuer, nor does it carry any right to vote on an issuer’s business or conduct. Hence SAFEX is also neither a “treasury stock” nor a “transferable share”. SAFEX does not fit the criteria of a “preorganization certificate or subscription”. The SAFEX is lacking the above described attributes simply because it does not represent any participation in a legal entity nor any interest would require representation of an interest in a business entity that was issued prior to, but in anticipation of, the legal formation of such entity.

b) The SAFEX are not a “security-based swap”, “put”, “call”, “straddle”, “option”, “warrant” “privilege on security”, “security indice”, “non-US currency” or “other asset” because holding of the SAFEX does not entitle a holder per se to contractually require anyone to buy or sell any other security or asset, to pay or receive payment of any amount.

c) The SAFEX are not evidenced or instantiated in certificated form.

d) The SAFEX neither represent nor convey any right to interest in any terrestrial commodity.

e) The SAFEX do not represent evidences of indebtedness, debentures, or bonds. SAFEX are not “bonds”, “notes”, and “debentures”.

2.4 Exchange of SAFEX

Since SAFEX does not fulfill any definition of a Security under the Securities act, the exchange in the SAFEX does not constitute exchange of the securities as defined under The Securities Exchange Act.

3.1 Evaluation of the SAFEX under The Investment Company act

3.2 The users of SAFEX do not participate in a common enterprise, neither do they make payments to such enterprise. Since SAFEX network is decentralized, there exists no authority or entity that is common and generates, sells, or controls SAFEX.

3.3 The users of SAFEX are not investing in any profits and/or risks of a SAFEX seller.

3.4 There is no contractual or otherwise agreed obligation for the SAFEX users to make any effort to increase the value of SAFEX. Any given historical value of SAFEX and its future value are not based on use of the received payments by the sellers.

3.5 The buyers of the SAFEX who decide to buy SAFEX because they think that it will increase in value do so not relating potential appreciation of value to actions of the seller or their expertise.

3.6 There is no obligation on the part of the sellers to increase the value of the sold SAFEX. The buyers of the SAFEX may expect profit but they must not expect profits to result from any action of a seller or promoter.

3.7 The circumstances listed under 3.2–3.6 above provide evidence that the SAFEX does not fulfill the vertical commonality criteria for “common enterprise” under The Investment Company Act.

3.8 There exists no correlation between the future value of the SAFEX and the payment received by a seller in the sale of a SAFEX hence also the “vertical commonality” test under The Investment Company Act is not satisfied.