Due to SEC regulations, if a cryptocurrency token is considered a security under the Howey Test, established by SEC v. W.J. Howey Co., 328 U.S. 293 (1946), then selling it before the project is developed could be seen as an unregistered securities offering, which is illegal unless properly registered or exempt. United States, Congress. Securities Act of 1933, 15 U.S.C. § 77e (2023); U.S. Securities and Exchange Commission v. Telegram Group Inc. and TON Issuer Inc., No. 19-cv-9439, 2020 WL 61528 (S.D.N.Y. Jan. 3, 2020); U.S. Securities and Exchange Commission v. Kik Interactive Inc., No. 19-cv-5244, 492 F. Supp. 3d 169 (S.D.N.Y. 2020).