Crowdfunding and Digital Asset Investment Disputes

Crowdfunding: what you bought and under which rules

An investment made through an online platform in exchange for shares, units, a note or a revenue share is a security. It was sold under one of three sets of rules, and the offering page tells you which.

• Regulation Crowdfunding (17 C.F.R. Part 227), the federal exemption under Securities Act section 4(a)(6). An issuer may raise up to $5,000,000 in a 12-month period, must sell only through a single SEC-registered intermediary, either a broker or a funding portal, and must file an offering statement on Form C with specified disclosures. Non-accredited investors are limited in what they may invest across all such offerings in a year, under a formula based on income and net worth.
• Texas intrastate crowdfunding. The Texas State Securities Board's rules, including 7 TAC § 139.26 for offerings relying on SEC Rule 147A and 7 TAC § 115.19 on Texas crowdfunding portal registration and activities, allow a Texas company to raise money from Texas residents through a Texas-registered portal without federal registration.
• Regulation D offerings on a platform. Many "crowdfunding" sites actually run Rule 506(c) private placements open only to verified accredited investors. The guide on a private placement that went bad covers those.

None of these exemptions removes the antifraud rules. Government Code section 4008.052 makes a seller liable for a sale by means of an untrue statement or misleading omission regardless of whether the offering was exempt, and the buyer need not prove intent. Federal Rule 10b-5 applies to the same statements with a scienter requirement. The crowdfunding pitch page, the video, the Form C, the updates posted to investors and the Q&A thread are all "statements" for these purposes, and platforms keep them.

Who is liable in a crowdfunding deal

The issuer, its officers and directors, and anyone who controlled it, under section 4008.055 of the Texas Securities Act, with the control person bearing the burden of proving it did not know and could not reasonably have known of the problem. Promoters paid to bring in investors who knew or recklessly ignored the truth are liable as aiders. The funding portal is harder: federal rules bar a funding portal from offering investment advice or soliciting purchases, and portals are liable mainly for their own misstatements or for failing the gatekeeping duties the rules impose, such as basic background checks on the issuer's principals. Claims against a portal turn on what it actually did.

Digital assets: is the token a security?

The test is the same investment-contract test used for every other unusual investment: an investment of money in a common enterprise with an expectation of profits derived from the efforts of others. Tokens sold to fund the development of a network, with promises that the team's work will raise the token's value, meet it. A token used only to buy a product on a working platform may not. The guide on unregistered securities and the Howey test explains the elements.

Three developments have reshaped the field and should be checked for the current position:

• A 2023 federal district court decision in New York held that an issuer's direct sales of a token to institutional buyers under written agreements were investment contracts, while its "programmatic" sales to anonymous buyers on exchanges were not, because those buyers could not know their money was going to the issuer. Other courts have declined to follow the distinction, so whether an exchange purchase supports a securities claim can depend on the court.
• The GENIUS Act, Public Law 119-27, signed July 18, 2025, created a federal regime for payment stablecoins and their issuers. A dispute over a stablecoin is now governed in part by that statute rather than only by the securities laws.
• The Digital Asset Market Clarity Act of 2025, H.R. 3633, which would divide authority over digital assets between the SEC and the CFTC and define when a digital asset is a commodity, passed the House on July 17, 2025.

Separately, the SEC's Crypto Task Force has moved from enforcement-first toward rulemaking, and in 2026 the SEC published proposed rules on crypto asset offerings, custody and trading. Until final rules and the legislation settle, an investor's claim is still evaluated under the investment-contract test and the antifraud provisions, which the pending changes do not repeal.

Who you can sue over a failed token or coin program

Where the facts show investor money paid to earlier investors, the program was a Ponzi scheme, and the recovery path runs through a receiver and clawbacks, covered in the guide on Ponzi scheme recovery. Where assets were moved on a public blockchain, tracing is often possible, and a Texas court can freeze identified assets and order turnover against a defendant within its jurisdiction.

Example

Suppose a McKinney investor puts $60,000 into a token presale promoted on social media by a Dallas-based founder, who posts that a major retailer has agreed to accept the token. The retailer never heard of it. The token is listed, falls 95 percent, and the foundation that issued it is a Cayman entity with an empty website. The investor's claim against the foundation is real but uncollectible. The founder, a Texas resident who wrote the posts, is a control person under section 4008.055 and a direct speaker for Rule 10b-5 and common-law fraud; rescission of the $60,000 with interest is available against him personally under the Texas Securities Act without proof of intent. A Dallas marketing firm that was paid in tokens to run the campaign and knew the retailer claim was invented faces aider liability. The case is filed in Dallas County district court against two Texas defendants, and the Cayman entity is named for completeness.

The Texas State Securities Board

The Texas State Securities Board enforces the Texas Securities Act through administrative, civil and criminal channels. Under Government Code chapter 4007 the Securities Commissioner can issue emergency cease-and-desist orders against an offering that is fraudulent, unregistered or would tend to work a fraud on purchasers, and can ask the attorney general to seek a receiver for a dealer, adviser or issuer. The Board has used those powers against digital-asset promoters. A complaint to the Board is free and can stop an ongoing offering, and the Board's orders and findings become useful evidence in a private suit, but the Board does not recover money for individual investors. A private claim does that.

Evidence to preserve now

• Screenshots and archived copies of the offering page, white paper, roadmap, social posts and every update, with dates. Pages disappear.
• Your wallet addresses, transaction hashes, exchange account statements and the bank records showing fiat transfers.
• Every message with the founders, promoters or support staff, including group chats.
• The platform's terms of service as they stood when you invested, since arbitration clauses change.
• For crowdfunding: the Form C or Texas exemption notice, the platform's investor updates and your confirmation of purchase.

When to involve a litigator

Quickly, because the two problems in these cases both get worse with time: evidence posted online is deleted, and the assets move. A litigator can tell you within days whether a reachable defendant exists, whether a receiver or regulator is already involved, and whether a Texas court or an arbitration forum will hear the claim. Tina Wysk represents investors and companies in securities and investment disputes in Dallas state and federal courts, including offerings made online and in digital assets.