372 F. Supp. 3d 1342
S.D. Fla.2019Background
- Plaintiffs invested cryptocurrency (Bitcoin, Ether, Waves, MobileGo) in offerings promoted by Monkey Capital entities and Daniel Harrison in advance of a scheduled ICO; the ICO never occurred and investors did not receive promised tokens.
- Harrison founded, managed, controlled Monkey Capital LLC and Monkey Capital Inc., solicited investments, and used a wallet he owned to receive investor funds.
- Monkey Capital offered and sold tokens (Monkey Coin, Coeval) across the U.S. using electronic means and did not register those offerings with the SEC or state securities regulators, nor claim exemptions.
- Default judgment previously entered against the Monkey Capital corporate defendants; Harrison remained as the only active defendant and proceeded pro se and failed to properly contest Plaintiffs’ summary-judgment submissions.
- On Plaintiffs’ partially unopposed summary-judgment motion, the Court treated Plaintiffs’ statement of facts as undisputed where supported by record evidence and resolved multiple claims for summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Count I: Violation of §12(a) (unregistered securities) | Harrison offered/sold investment contracts (tokens) unregistered with SEC; investors expected profits from Harrison’s efforts | Pro se Harrison did not meaningfully oppose or cite contradictory evidence | Granted — transactions are investment contracts (Howey test satisfied); Harrison participated in unregistered sales; Plaintiffs suffered damages |
| Count II: §15(a) (control-person liability) | Harrison was founder/manager with power to control Monkey Capital and thus liable as a controlling person | No effective defense presented | Granted — Harrison liable as a controlling person for primary violations |
| Count III: Rescission of contract | Plaintiffs seek rescission based on fraud/misrepresentation tied to the ICO failure | Plaintiffs failed to identify record evidence of specific fraud, mistake, or actual rescission/offer to restore benefits | Denied — record lacks evidentiary support for rescission elements |
| Count IV: Alter-ego liability | Harrison treated the corporate form as his instrumentality, commingled assets, and control warrants piercing the corporate veil | No effective contest presented | Granted — facts support disregard of corporate separateness and alter-ego liability |
| Count V: Violation of Fla. Stat. §§517 (state securities law) | Offerings were securities, unregistered in Florida, and sold to Plaintiffs | No effective defense presented | Granted — unregistered sale of securities in violation of Florida law; Plaintiffs suffered damages |
| Count VI: FDUTPA (deceptive/unfair trade practices) | Harrison made false representations about product, token issuance, and use of funds constituting deceptive/unfair acts | Plaintiffs did not cite admissible record evidence of the specific deceptive acts at summary judgment | Denied — insufficient record evidence cited to support FDUTPA elements |
| Count VII: Fraudulent inducement | Plaintiffs allege material misrepresentations that induced investment | Plaintiffs failed to cite record evidence of specific misrepresentations at summary judgment | Denied — no admissible evidentiary support shown |
| Count VIII: Conversion | Plaintiffs transferred cryptocurrency for investment and did not receive return when ICO failed | Harrison did not rebut that he deprived Plaintiffs of their property | Granted — summary judgment for Plaintiffs on conversion |
Key Cases Cited
- Ellis v. England, 432 F.3d 1321 (11th Cir. 2005) (standard for genuine dispute at summary judgment)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (moving party’s summary-judgment burden)
- SEC v. W.J. Howey Co., 328 U.S. 293 (U.S. 1946) (Howey test for investment contract)
- SEC v. Unique Fin. Concepts, Inc., 196 F.3d 1195 (11th Cir. 1999) (investment-contract and common-enterprise analysis)
- United States v. Four Parcels of Real Prop. in Greene & Tuscaloosa Ctys., 941 F.2d 1428 (11th Cir. 1991) (moving party burden when it bears trial burden)
- United States v. Hornaday, 392 F.3d 1306 (11th Cir. 2004) (internet as instrumentality of interstate commerce)
- SEC v. Merchant Capital, LLC, 483 F.3d 747 (11th Cir. 2007) (focus on investor dependence on promoter’s efforts)