# US 12,223,496 B2 · Self-enforcing security token implementing smart-contract-based compliance rules consulting smart-contract-based global registry of investors > Agents: this data is available as JSON from the patentgrep API and MCP server — see https://patentgrep.com/llms.txt - Number: US 12,223,496 B2 - Document ID: US12223496B2 - Status: Granted - Kind: B2 - Application number: 18/519,613 - Filed: 2023-11-27 - Published: 2024-03-21 - Granted: 2025-02-11 - Earliest claimed: 2018-08-10 - Assignees: tZERO IP, LLC - Applicants: tZERO IP, LLC - Inventors: Scott Overholser; Robert Christensen; Nicole Sanders; Justin Wilson; Robert Valmassoi; Chase Lester; Michael William Stuart Smith; Andrew Warner - Web page: https://patentgrep.com/patent/US12223496B2 ## CPC - G06Q 20/367: {involving electronic purses or money safes} - H04L 63/12: {Applying verification of the received information (cryptographic mechanisms or cryptographic arrangements for data integrity or data verification H04L9/32)} - G06F 16/1834: {implemented based on peer-to-peer networks, e.g. gnutella (p2p communication protocols H04L67/104)} - G06Q 20/065: {using e-cash} - G06Q 20/0658: {e-cash managed locally} - G06Q 20/3672: {initialising or reloading thereof} - G06Q 20/3678: {e-cash details, e.g. blinded, divisible or detecting double spending} - G06Q 20/389: {Keeping log of transactions for guaranteeing non-repudiation of a transaction} - G06Q 20/405: {Establishing or using transaction specific rules} - G06Q 40/04: Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange - H04L 9/3236: {using cryptographic hash functions} - H04L 63/20: {for managing network security; network security policies in general (filtering policies H04L63/0227)} - G06Q 2220/00: Business processing using cryptography - H04L 9/50: {using hash chains, e.g. blockchains or hash trees} - H04L 2209/56: Financial cryptography, e.g. electronic payment or e-cash - H04L 2463/102: applying security measure for e-commerce - G06Q: INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR - H04L: TRANSMISSION OF DIGITAL INFORMATION, e.g. TELEGRAPHIC COMMUNICATION (arrangements common to telegraphic and telephonic communication H04M) - G06F: ELECTRIC DIGITAL DATA PROCESSING (computer systems based on specific computational models G06N) ## Abstract A network node in a peer-to-peer network of nodes includes at least one processor, at least one memory, and at least one network interface. The at least one processor is configured to receive a request to transfer a security token and execute a plurality of compliance rules associated with the security token. At least one of the compliance rules is implemented using at least one smart contract. The at least one smart contract references a global registry. The at least one processor is also configured to transfer the security token based on the execution of the compliance rules. The global registry includes personally identifiable information (PII) hash(es) for each of at least one investor associated with the transfer of the security token. The hashes are committed to the distributed ledger and updated when PII of a respective one of the at least one investor changes. ## Claims ### Claim 1 A network node comprising: at least one processor; at least one memory communicatively coupled to the at least one processor; at least one network interface communicatively couple to the at least one processor; wherein the network node is configured to be within a plurality of network nodes communicatively coupled in a peer-to-peer network of network nodes implementing a distributed ledger; and wherein the network node is configured to be communicatively coupled to at least one remotely located computing device through the at least one network interface; wherein the at least one processor is configured to: receive, from a remotely located computing device, a request to transfer a security token; execute a plurality of compliance rules associated with the security token, wherein at least one of the plurality of compliance rules is implemented using at least one smart contract, wherein the at least one smart contract references a global registry; and transfer the security token based on the execution of the plurality of compliance rules, wherein the global registry comprises at least one personally identifiable information (PII) hash for each of at least one investor associated with the transfer of the security token, wherein the at least one PII hash for each of the at least one investor is committed to the distributed ledger, wherein each of the at least one PII hash is updated when PII of a respective investor of the at least one investor changes. ### Claim 2 (depends on 1) The network node of claim 1, wherein the security token is a cryptographic token that represents an external, tradeable asset. ### Claim 3 (depends on 1) The network node of claim 1, wherein the global registry comprises indication of at least one of: whether an offering of the security token qualifies under Securities and Exchange Commission (SEC) Regulation A; whether at least one of the at least one investor qualifies under SEC Regulation D; or whether the offering of the security token qualifies under SEC Regulation S. ### Claim 4 (depends on 3) The network node of claim 3, wherein the global registry further comprises indication of at least one of: whether anti-money laundering and know-your-customer (AML/KYC) checks have been performed for the at least one investor associated with the transfer of the security token; or a length of time a particular security token has been owned by a particular investor. ### Claim 5 (depends on 4) The network node of claim 4, wherein the global registry further comprises indication of at least one of: whether a freeze has been placed on any of the at least one investor; whether a freeze has been placed on the security token; whether a freeze has been placed on a custodian associated with the transfer of the security token; or whether a freeze has been placed on any broker dealer associated with the transfer of the security token. ### Claim 6 (depends on 5) The network node of claim 5, further comprising at least one of: wherein a freeze is placed on or removed from any of the at least one investor by modifying first attributes in an investor element in the global registry; wherein a freeze is placed on or removed from the security token by modifying second attributes in a security token element in the global registry; wherein a freeze is placed on or removed from the custodian by modifying third attributes in a custodian element in the global registry; or wherein a freeze is placed on or removed from any broker dealer associated with the transfer of the security token by modifying fourth attributes in a broker dealer element in the global registry. ### Claim 7 (depends on 5) The network node of claim 5, wherein the global registry comprises a data storage smart contract that stores at least one indication in the global registry. ### Claim 8 (depends on 1) The network node of claim 1, wherein the security token stores a table that indicates a length of time a particular security token has been owned by a particular investor. ### Claim 9 (depends on 1) The network node of claim 1, wherein the security token is implemented using an originating smart contract. ### Claim 10 (depends on 1) The network node of claim 1, wherein a record of an issuance of the security token is recorded on the distributed ledger. ### Claim 11 (depends on 1) The network node of claim 1, wherein a record of the transfer of the security token is committed to the distributed ledger. ### Claim 12 (depends on 1) The network node of claim 1, wherein the request to transfer the security token is a request to transfer the security token from a first address to a second address, wherein the at least one processor is configured to: before the request to transfer the security token is received, determine a split ratio for a new split of security tokens held in at least one address of the distributed ledger without updating token balances on the distributed ledger; determine a split-updated token balance for at least the first address based on at least an indication of the split ratio; and wherein the token balances on the distributed ledger are updated for at least the first address based on the split-updated token balance for at least the first address as part of a transaction associated with the transfer of the security token. ### Claim 13 A computerized method for transferring a self-enforcing security token, wherein the computerized method is performed by a network node configured to be included within a plurality of network nodes in a peer-to-peer network of network nodes implementing a distributed ledger, wherein the network node is configured to be communicatively coupled to other network nodes in the peer-to-peer network, the computerized method comprising: receiving, from a remotely located computing device, a request to transfer a security token; executing a plurality of compliance rules associated with the security token, wherein at least one of the plurality of compliance rules is implemented using at least one smart contract, wherein the at least one smart contract references a global registry; and transferring the security token based on the execution of the plurality of compliance rules, wherein the global registry comprises at least one personally identifiable information (PII) hash for each of at least one investor associated with the transfer of the security token, wherein the at least one PII hash for each of the at least one investor is committed to the distributed ledger, wherein each of the at least one PII hash is updated when PII of a respective investor of the at least one investor changes. ### Claim 14 (depends on 13) The computerized method of claim 13, wherein the security token is a cryptographic token that represents an external, tradeable asset. ### Claim 15 (depends on 13) The computerized method of claim 13, wherein the global registry comprises indication of at least one of: whether an offering of the security token qualifies under Securities and Exchange Commission (SEC) Regulation A; whether at least one of the at least one investor qualifies under SEC Regulation D; or whether the offering of the security token qualifies under SEC Regulation S. ### Claim 16 (depends on 13) The computerized method of claim 13, wherein the global registry further comprises indication of at least one of: whether anti-money laundering and know-your-customer (AML/KYC) checks have been performed for at least one investor associated with the transfer of the security token; or a length of time a particular security token has been owned by a particular investor. ### Claim 17 (depends on 16) The computerized method of claim 16, wherein the global registry further comprises indication of at least one of: whether a freeze has been placed on any of the at least one investor; whether a freeze has been placed on the security token; whether a freeze has been placed on a custodian associated with the transfer of the security token; or whether a freeze has been placed on any broker dealer associated with the transfer of the security token. ### Claim 18 (depends on 17) The computerized method of claim 17, further comprising at least one of: wherein a freeze is placed on or removed from any of the at least one investor by modifying first attributes in an investor element in the global registry; wherein a freeze is placed on or removed from the security token by modifying second attributes in a security token element in the global registry; wherein a freeze is placed on or removed from the custodian by modifying third attributes in a custodian element in the global registry; or wherein a freeze is placed on or removed from any broker dealer associated with the transfer of the security token by modifying fourth attributes in a broker dealer element in the global registry. ### Claim 19 (depends on 17) The computerized method of claim 17, wherein the global registry comprises a data storage smart contract that stores at least one indication in the global registry. ### Claim 20 (depends on 13) The computerized method of claim 13, wherein the security token stores a table that indicates a length of time a particular security token has been owned by a particular investor. ### Claim 21 (depends on 13) The computerized method of claim 13, wherein the security token is implemented using an originating smart contract. ### Claim 22 (depends on 13) The computerized method of claim 13, wherein a record of an issuance of the security token is recorded on the distributed ledger. ### Claim 23 (depends on 13) The computerized method of claim 13, wherein a record of the transfer of the security token is committed to the distributed ledger. ### Claim 24 (depends on 13) The computerized method of claim 13, wherein the request to transfer the security token is a request to transfer the security token from a first address to a second address, wherein the computerized method further comprises: before the request to transfer the security token is received, determining a split ratio for a new split of security tokens held in at least one address of the distributed ledger without updating token balances on the distributed ledger; determining a split-updated token balance for at least the first address based on at least an indication of the split ratio; and wherein the token balances on the distributed ledger are updated for at least the first address based on the split-updated token balance for at least the first address as part of a transaction associated with the transfer of the security token.