Angels and Devils: The Early Crypto Entrepreneurs

William & Mary Law School Research Paper No. 09-460

37 Pages Posted: 18 Nov 2022 Last revised: 4 Oct 2023

Date Written: November 15, 2022


Angel investing is different than venture capital. It is about 'for-profit philanthropy', or giving back to the entrepreneurial community while also making a profit. Market and legal changes over the last decade have caused angels to migrate online and into professional groups, changing the fundamental nature of angel practice. Angel investing is now much the same as dollars-and-cents venture capital investing.

For-profit philanthropy has reappeared in crypto, however. The creators of Bitcoin and Ethereum both exhibited the dual motives that long characterized angel investing: money and growing an ecosystem.

Where there are angels, there are also devils. Crypto devils are scammers who rug pull investors, often selling Ponzi schemes under the guise of blockchain innovation. Some crypto projects start out as scams, while other scams result from fallen angels. FTX’s Sam-Bankman Fried and Terra Luna’s Do Kwon may be crypto devils who started out with good intentions but went wrong along the way.

After revealing the presence of angels and devils among the early crypto entrepreneurs, this Article arrives at the legal payoff. The Howey test, used to determine if a crypto is a security, is actually asking about angels and devils. Reframing Howey to focus on angels and devils clarifies how to apply two of Howey’s four prongs.

This Article proposes that angels, where found, should be deemed to have issued commodities, whereas devils should be deemed to have issued securities. This will strike the proper balance of allowing the SEC to protect investors from scams while allowing legitimate crypto assets to be sold under the lighter-touch CFTC commodities regulation.

Keywords: crypto, Howey test, digital assets, securities, angel investing, Bitcoin, Ethereum, SEC, CFTC

Suggested Citation

Ibrahim, Darian M., Angels and Devils: The Early Crypto Entrepreneurs (November 15, 2022). William & Mary Law School Research Paper No. 09-460, Available at SSRN: or

Darian M. Ibrahim (Contact Author)

affiliation not provided to SSRN

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