Attack A-11 · phase-9 · spec-refinement
Cross-jurisdiction regulatory arbitrage (US/Ecuador differential characterization)
A US-based Earth Credit buyer purchases credits issued against an Ecuadorian property. The SEC opens an inquiry arguing that the Ecuadorian structure — Ecuadorian fundación + Marshall Islands DAO LLC + economic flows from credit sales — constitutes an investment contract from the US buyer's perspective: investing money in a common enterprise with expectation of profit from the efforts of Ecuadorian community stewards.
Scenario
A US-based Earth Credit buyer purchases credits issued against an Ecuadorian property. The SEC opens an inquiry arguing that the Ecuadorian structure — Ecuadorian fundación + Marshall Islands DAO LLC + economic flows from credit sales — constitutes an investment contract from the US buyer's perspective: investing money in a common enterprise with expectation of profit from the efforts of Ecuadorian community stewards.
Mechanism
Per-jurisdiction depth reveals wrapper structure differs by jurisdiction, but economic flows from each reach the same Earth Credit buyer. A regulator applying Howey to the entire economic structure — not just the credit as an instrument — can argue buyers are implicitly investing in the ecosystem of Landseed-managed properties as a 'common enterprise,' undermining per-property isolation.
Mitigation
Per-deployment counsel confirmation (securities counsel) that the specific wrapper structure in each jurisdiction does not create Howey 'common enterprise' as seen by US buyers. Credit purchase agreements for US buyers include specific representations distinguishing credit purchase from investment in any DAO. Cross-jurisdictional wrapper variety is not marketed as a portfolio or ecosystem.
Residual risk
Medium. Per-property isolation is the primary defense, but it is tested when the same buyer purchases credits from multiple jurisdictions under different wrapper structures.