First, I do not agree that pre-selling a purely functional token is necessarily an offering of securities under Howey or otherwise. If the protocol is already specified, and the token has clear utility. I don't know if that's the case here, but just taking the article at face value.
Second, even if a particular token represents a security, offering it to the public is not "securities fraud" in and of itself. Fraud is a material misstatement or omission. What the author is talking about would be an unregistered securities offering, which if no exemption is available, would be illegal. Illegal but not necessarily fraudulent per se.
This is not to say that Colony should have an ICO. I don't know anything about their specific case. But this article is not useful to anyone else trying to make a similar decision.
Second, even if a particular token represents a security, offering it to the public is not "securities fraud" in and of itself. Fraud is a material misstatement or omission. What the author is talking about would be an unregistered securities offering, which if no exemption is available, would be illegal. Illegal but not necessarily fraudulent per se.
This is not to say that Colony should have an ICO. I don't know anything about their specific case. But this article is not useful to anyone else trying to make a similar decision.