746 F.Supp.3d 1360
S.D. Fla.2024Background
- Plaintiffs filed a class action against Shaquille O'Neal, Astrals LLC, Astrals Holding LLC, and Astrals Operations LLC, alleging improper conduct in connection with the sale of Galaxy tokens.
- Defendants moved to dismiss, later supplementing their motion, arguing Morrison v. Nat'l Australia Bank Ltd. requires plaintiffs to plead facts showing the transaction at issue is domestic under U.S. law.
- The relevant contract is a Simple Agreement for Future Tokens (SAFT), purportedly governed by Nevada law, whereby Astrals LLC agreed to issue Galaxy tokens to plaintiffs in exchange for $25,000.
- Defendants asserted that certain contingencies in the SAFT meant they never incurred irreversible liability to deliver tokens, unless there was a network launch.
- The Court focused on whether sufficient facts were pled to show the transaction was domestic, per Morrison's transactional test.
- The motion arises in the U.S. District Court for the Southern District of Florida, Miami Division.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Galaxy token transaction was domestic under Morrison | Plaintiffs allege facts about U.S.-based contract and transfer of title | Defendants argue contingency meant no irrevocable liability in U.S. | Sufficient facts pled; motion to dismiss denied |
| Whether the SAFT created irrevocable liability in the U.S. | Both parties signed, escrow exchanged, right to tokens issued | Tokens were only to be delivered upon network launch, which could be revoked | SAFT established obligation; argument unpersuasive |
| Need for physical presence of plaintiff in U.S. | Location of transaction, not parties, controls | No specific argument stated | No physical presence requirement |
| Adequacy of factual allegations about transaction's location | Agreement involved money exchanged, governed by U.S. law | Plaintiffs failed to show closure of transaction in U.S. | Allegations sufficient |
Key Cases Cited
- Morrison v. Nat'l Australia Bank Ltd., 561 U.S. 247 (2010) (establishes the transactional test for determining if federal securities laws apply to foreign transactions)
- Quail Cruises Ship Mgmt. Ltd. v. Agencia de Viagens CVC Tur Limitada, 645 F.3d 1307 (11th Cir. 2011) (sufficient to allege transfer of title domestically for securities law applicability)