The Cryptocurrency & Blockchain Industries are fascinating, fast moving spaces that see a lot of new startups and established companies want to jump in. ICO’s or Initial Coin Offerings are a great way to raise capital for those projects and it’s also a great way to get into trouble with regulatory bodies like the SEC; the U.S. Securities and Exchange Commission and here in Ontario the OSC; the Ontario Securities Commission. I get asked often to advise on the marketing of an ICO in the initial stages. I find it interesting that companies are thinking of marketing before even thinking of the legal structure of the ICO they are going to sell to investors. The ultimate legal structure of the ICO affects how I would market your ICO.
I spoke with Toronto, ON Securities Law expert, Jack J. Bensimon LL.M, an advisor to various crypto exchanges, ICOs and conference speaker on crypto and asked him some of the common questions I get asked about ICO’s, jurisdictions and the infamous SEC.
Launching An ICO — Have You Done Your Compliance Homework?
On average, I speak to 5 to 7 firms each week–all of whom are looking to launch a new ICO (Initial Coin Offering). Each of them wants to go to market with their idea ASAP yet, in their rush to launch, an alarming percentage of these prospective ICO’s has not sought appropriate regulatory compliance advisory. In the same conversation they will mention their desire to target US investors which is acceptable because their token is considered a utility token. Having proper and experienced advisory helps with token structure and is imperative for a successful ICO launch.
“I believe every ICO I’ve seen is a security.”
Securities and Exchange Commission Chairman Jay Clayton
FOMO (Fear of Missing Out) is not just affecting investors, it’s touching every part of the community including those with just a crypto website, a countdown ticker and a barely developed white paper, and those whom have, potentially great projects, all wanting to ride the ICO wave. I have seen ICO sales start then stop, switch jurisdictions and then start over. I have seen ICO’s delayed for months due to a lack of or improper legal counsel. Wasted time and money that could have been avoided had they engaged an attorney from the beginning.
Continue reading article here ‘Launching an ICO – Have You Done Your Legal Homework?’
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