Analyst: Most tokens fail due to structure designed to evade regulation

Crypto analyst Alex Krüger argued on X that most cryptocurrency projects fail because their structures are designed to evade U.S. securities laws. He explained that due to the U.S. Securities and Exchange Commission's (SEC) Howey Test and its regulation-by-enforcement approach, projects have stripped all rights from their tokens to avoid being classified as securities. This has resulted in a system where token holders have no legal recourse and founding teams have no fiduciary duty, Krüger noted. He added that this allows projects to misuse funds, change their business direction at will, or abandon their work altogether without facing any consequences. Krüger also pointed out that venture capital (VC) firms invested billions of dollars into these structures, fully aware of their flaws, effectively treating retail investors as exit liquidity. He concluded that this environment has pushed frustrated retail investors toward memecoins, which only intensifies the zero-sum, gambling-like nature of the market due to their even greater speculativeness and lack of transparency.