Vault12 raised $17.45 million from 38 investors in 2018, but its Vault Guardian Token (VGT) has never been listed on a centralized exchange, even though the company says it has fulfilled or abandoned every commitment in its original white paper.
The case highlights concerns about whether the U.S. Securities and Exchange Commission’s (SEC) proposed crypto safe harbor will provide enough regulatory certainty for older token projects.
Vault12, a crypto wallet backup company supported by Winklevoss Capital and Naval Ravikant, warned that exchanges may remain reluctant to list tokens if they fear the SEC could challenge their regulatory status in the future.
The proposed safe harbor is part of the SEC’s Regulation Crypto Assets framework, introduced in August to outline how certain tokens could move beyond the securities obligations associated with their original investment contracts.
In a comment letter submitted Tuesday, Vault12 said its 2018 fundraising through future-token agreements closely aligns with the conditions outlined in the proposal. However, despite completing or formally discontinuing its white paper commitments, the company has been unable to secure a centralized exchange listing for VGT.
Vault12 also backed concerns raised by industry group The Digital Chamber, which has called attention to uncertainties surrounding the SEC’s proposed framework.
According to Vault12, exchanges approached about listing VGT repeatedly asked whether the SEC might later determine that the token remained subject to its original investment contract. The company argued that the current proposal does not adequately address this concern.
Under the framework, eligible issuers could access fundraising exemptions and a conditional safe harbor to terminate an investment contract associated with a token. Projects would need to complete or permanently discontinue essential managerial efforts, make no new commitments of that kind and have no intention of doing so.
Issuers would also be required to submit a transition report, known as Form TR, explaining why they believe the investment contract has ended.
However, the SEC would retain the authority to challenge whether an issuer had met the safe harbor requirements. If a certification were found to be inaccurate, the agency could determine that the investment contract remained active and that securities-law obligations still applied.
The proposal also leaves room for other parties to argue that a token remains subject to an investment contract or otherwise qualifies as a security.
To address the uncertainty, Vault12 recommended giving the SEC 60 days to object to a properly submitted certification. If the agency did not raise an objection within that period, the certification would become conclusive for the SEC, except in cases involving fraud or material misstatements.
