However, throwing any possible ICO idea at Mr. Vilardo, he was able to cite previous successful SEC lawsuits that the SEC could use as presedence.
The only token I could conceive that he thought there SEC would not be able to go after is a token that can only be bought and sold at a fixed price and only from the issuer (non-transferable).
He also reminded me that the SEC is one entity. States have their own securities law and you could easily be sued in state court under a different set of securities rules than the federal government has.
EDIT: Also, to be clear ICOs and securities are not illegal. Selling an unregistered security is illegal. If you want to sell a security you can register it with the SEC and be fine. That will of course be pretty expensive.
Ethereum itself seemingly fails the Howey test, so it will be interesting to see if they are all prosecuted.
"From April 30, 2016 through May 28, 2016, The DAO offered and sold approximately 1.15 billion DAO Tokens in exchange for a total of approximately 12 million Ether (“ETH”), a virtual currency used on the Ethereum Blockchain."
They might change their mind on the matter, and expand their definition of virtual currency to be securities, but they went out of their way to publish a piece which references the word "Ethereum" 39 times, "Ether" 2 times, and "ETH" 15 times. None of those times do they refer to Ethereum as as security.
[1] - https://www.sec.gov/litigation/investreport/34-81207.pdf
That's actually the entire point of the Howey test, which was established as part of a case to determine whether or not property that was classified as real estate could also be classified as a security.
ICOs are not crypto. They use a small amount of cryptography in their implementation, but no serious member of the real crypto community is working on any ICO (based on Ethereum anyway. Yes, a proof of stake coin is worth working on).
Given crowd funding through token sales is the first major use-case for cryptocurrency, and is funding numerous cryptocurrency projects, I can't see how one could argue that it is not important to the cryptocurrency sector. Also, almost all token sales are on Ethereum.
http://static2.businessinsider.com/image/598c2fd427fa6b5e174...
Mr Villardo's comments are chilling. If as you said "Basically, ICOs are 99% of the time classified as securities in the US.", the SEC needs to come out and say it.
This will of course lead to the freezing of US persons from participating in most ICOs, and lead most of our crypto community to move to Switzerland.