In a first, on April 3, 2019, the US Securities and Exchange Commission issued its first cryptocurrency No-Action Letter.  The Letter was issued to TurnKey Jet Inc. (“TKJ”), a jet-leasing business. The company will issue the TKJ digital tokens to people who sign up for its membership program and the members can then use the tokens to charter a private jet.  Based on the Letter, TKJ may offer and sell its tokens without registration under the Securities Act and the Exchange Act.  The action was taken because of the following representations that TKJ made to the SEC:

  • TKJ will not use any funds from Token sales to develop the TKJ Platform, Network, or App, and each of these will be fully developed and operational at the time any Tokens are sold;
  • the Tokens will be immediately usable for their intended functionality (purchasing air charter services) at the time they are sold;
  • TKJ will restrict transfers of Tokens to TKJ Wallets only, and not to wallets external to the Platform;
  • TKJ will sell Tokens at a price of one USD per Token throughout the life of the Program, and each Token will represent a TKJ obligation to supply air charter services at a value of one USD per Token;
  • If TKJ offers to repurchase Tokens, it will only do so at a discount to the face value of the Tokens (one USD per Token) that the holder seeks to resell to TKJ, unless a court within the United States orders TKJ to liquidate the Tokens; and
  • The Token is marketed in a manner that emphasizes the functionality of the Token, and not the potential for the increase in the market value of the Token.

Representatives of the SEC have previously spoken about the possibility of issuing no-action letters in connection with token sales and this first one provides some guidance as to the factors that the SEC considers important.  Of course, because the TKJ Token has so many restrictions, it lacks the allure that tokens often have for cryptocurrency investors.  But those factors were obviously not an important reason why TKJ wants to use the Tokens.  Because of the limits placed on the Tokens, especially the bar on trading them in the open market, it is unclear how many other companies will follow suit.  But that might be exactly what the way the SEC wants it.


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. He is currently the Chairman of the Litigation Department of the firm’s New York office. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. Since 2008, David has been included in Chambers for his expertise in international arbitration.