SAFTs. We have treated Hedera’s SAFTs as investment contracts. People who purchased hbars through the SAFT did so before there was a live network, before hbars existed, and when they had to rely on the efforts of the Hedera team to deliver a functioning network to the market in order for those hbars to have use or value. Hedera expressly stated that the SAFT was a security and conducted its SAFT financing in accordance with SEC regulations.
Hbars. Hedera’s view is that once the network moves to open access, the hbars released to SAFT holders and sold to users of the network should not be characterized as securities or be subject to US securities law. At that time, the network will have been live for several months, and third-party developers will have started to deploy applications. Developers and users will need hbars in order to use the network, and meaningful growth of the network from that point forward will not be driven primarily by Hedera’s efforts but by whether developers and enterprises bring useful applications to market on top of it. Hedera has been meeting with the SEC to discuss Hedera’s position regarding hbars, but has not yet received any guidance as to the SEC’s view of hbars. As disclosed in the risk factors attached to every SAFT, there is a risk that the SEC could deem the hbars to be securities. Although we believe the better view is that they are not securities, there remains a risk that the SEC will take a contrary view.