Why Does the SEC Prefer the Horizontal Commonality Test in Most Enforcement Actions?

The SEC generally prefers the horizontal commonality test in most enforcement actions involving crypto offerings because it is easier to prove in the context of an Initial Coin Offering (ICO) or token sale. Most ICOs involve a large number of investors whose funds are pooled together to finance the project, and they all expect to share in the overall success of the project.

This pooling and pro-rata sharing directly satisfies the horizontal test, making it a straightforward legal argument for establishing the "common enterprise" prong of the Howey Test.