MSTR Cat

Crypto Law/Level VI · Market conduct/6.3 The honest launch/Lesson 1

What honest disclosure looks like

Why the law judges a launch by what its creators say and leave out, and how materiality, half-truths and cautionary language decide whether a disclosure is honest.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Zero-cost baseline: say nothing you cannot prove and qualify every claim you do make. Macquarie (2024) holds pure omissions are not actionable under Rule 10b-5(b), but half-truths are; ‘liquidity locked’ must say when the lock ends.
  2. Test each claim against the TSC Industries standard: would a reasonable buyer likely consider it important? Unlocks, mint powers and single-key treasuries usually are. Catch: Rule 10b-5(a) and (c) and CFTC Rule 180.1 still reach deceptive schemes.
  3. Use the ten topics of proposed Rule 103(b) in Regulation Crypto Assets as a free checklist; a one-page answer to each is cheap. Catch: it is a proposal, comments due 20 October 2026, binding only issuers using its exemptions.
  4. Skip boilerplate risk warnings: the 15 U.S.C. §78u-5 safe harbor covers only SEC reporting issuers and excludes initial offerings, so typical token creators cannot rely on it. Specific, factual cautions cost no more to write.
  5. EU offers: MiCA Article 4(2) waives the white paper for offers to fewer than 150 persons per Member State, totalling at most €1,000,000 over 12 months, or only to qualified investors. Catch: Article 7 marketing rules still apply.

MaterialsSEC Rule 10b-5 (17 CFR §240.10b-5) and CFTC Rule 180.1 (17 CFR §180.1), side by sideThe Supreme Court’s opinion in Macquarie Infrastructure v. Moab Partners (12 April 2024)Every public statement a launch has made: website, white paper, pinned posts and announcementsLessons 5.1.3 and 5.1.7, on promises of returns and marketing claims

Wonder

  1. If I never mention something, can I be blamed for leaving it out?
  2. How do I know which facts are important enough that buyers must hear them?
  3. Does a disclaimer at the bottom of the page protect a confident roadmap at the top?

Explore

  1. Disclosure means telling buyers the facts that bear on what they are buying. Honest disclosure has two halves: what is said must be true, and what is left out must not make the rest misleading. US law states both halves in nearly the same words whatever the token is. SEC Rule 10b-5(b) bars any untrue statement of a material fact, or omitting a material fact needed to make the statements made not misleading, in connection with a securities trade. CFTC Rule 180.1(a)(2) repeats that formula for commodities. So the test applies whether or not a token turns out to be a security (lessons 1.2.3 and 1.2.4).
  2. The word that does the work is ‘material’. In TSC Industries v. Northway (1976) the Supreme Court said a fact is material if there is a substantial likelihood that a reasonable investor would consider it important, so that disclosing it would significantly alter the ‘total mix’ of information available. Basic v. Levinson (1988) adopted that test for Rule 10b-5 and added that, for events that may or may not happen, materiality depends on the probability of the event and its magnitude. For a token, a large unlock next month, a live power to mint more, or a single key controlling the treasury can each be material.
  3. Silence and half-truths are treated differently. In Macquarie Infrastructure v. Moab Partners (12 April 2024) a unanimous Supreme Court held that ‘pure omissions’ are not actionable under Rule 10b-5(b): a speaker who says nothing on a subject is not liable under that clause for the silence. Half-truths are: statements that are true as far as they go but leave out critical qualifying information. ‘Liquidity locked’ while the lock ends next week, or ‘team tokens vested’ while the vesting contract’s owner can be changed, are the classic shape (lessons 6.3.2 and 6.3.4). Schemes to deceive remain separately reachable under Rule 10b-5(a) and (c).
  4. Cautionary language helps only when it is specific. The US statutory safe harbor for forward-looking statements, 15 U.S.C. §78u-5, protects only issuers already subject to SEC periodic reporting and excludes statements made in initial public offerings, so a typical token creator cannot rely on it. Even where it applies, it requires ‘meaningful cautionary statements identifying important factors’ that could make results differ. The SEC’s 2026 interpretation (Release No. 33-11412) goes further: issuers that promise managerial work are encouraged to describe it clearly, with a timeline, milestones and the resources needed, and to disclose publicly when it is done (lesson 5.1.3).
  5. For a picture of what regulators think buyers need, the SEC’s proposed Regulation Crypto Assets (18 August 2026) lists ten disclosure topics in proposed Rule 103(b), among them the offering’s terms, management and related persons, the development plan, security and source code, supply and allocations, governance and permissions, and risk factors, each in a ‘principles-based’ way. It is a proposal, with comments due by 20 October 2026, and would bind only issuers using its exemptions (lesson 5.1.2). Even so, the list works as a map of the questions an honest launch should be able to answer, whatever its legal status.
  6. Europe writes the standard into the law itself. Under MiCA Article 6(2), all information in a crypto-asset white paper must be fair, clear and not misleading, with no material omissions, in a concise and comprehensible form. Article 12 requires the white paper to be modified whenever a significant new factor, material mistake or material inaccuracy arises, for as long as the offer runs or the token is admitted to trading, and older versions must stay online, marked as outdated. A practical check: for each public claim a launch makes, write down the qualifying fact a cautious buyer would most want next to it, and check whether it is there.

Key facts

  • SEC Rule 10b-5(b) prohibits untrue statements of material fact and omissions of material facts necessary to make the statements made not misleading.
  • CFTC Rule 180.1(a)(2) applies the same prohibition on untrue or misleading statements and misleading omissions to dealings in commodities.
  • In TSC Industries v. Northway (1976) the Supreme Court defined a material fact as one a reasonable investor would be substantially likely to consider important.
  • In Macquarie Infrastructure v. Moab Partners (12 April 2024) the Supreme Court held that pure omissions are not actionable under Rule 10b-5(b), while half-truths are.
  • The safe harbor in 15 U.S.C. §78u-5 applies only to issuers subject to SEC periodic reporting and excludes statements made in connection with an initial public offering.
  • MiCA Article 6(2) requires a crypto-asset white paper to be fair, clear and not misleading and to contain no material omissions.

Exercise nine, six, three, one

9CollectList up to 9 statements from a token launch you know or are planning (some lists are shorter), such as ‘liquidity locked’, ‘team tokens vested’, ‘audited’, ‘no presale’ or a roadmap item.
6ClusterSort them into 6 categories: statements about supply, about control and permissions, about insiders, about the team’s future work, about safety or audits, and statements you could not check.
3DistillReduce the 6 categories to 3 groups: statements that are complete as they stand, statements that need a qualifying fact added, and statements that should not be made at all.
1CrystallizeWrite 1 sentence stating the one qualifying fact a reasonable buyer would most want to see next to the strongest claim on your list.

Fact check

Dates, figures and claims checked against the published sources listed below.

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