Articles Tagged with ICO

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AdobeStock_366696178-300x200Many startups jumped onto the cryptocurrency bandwagon by offering Initial Coin Offerings (ICOs) in lieu of IPOs. But there were pitfalls here as there are with any new technology. ICOs can act like IPOs which are typically securities offered to investors.

If so, then the SEC governs the transaction. On the other hand, not all IPOs are securities. These are known as utility tokens and do not offer a share of the venture, but rather some other benefit, such as free services or the right to purchase a stake later.

Even with some confusion over the ICO itself, major investment banks are beginning to jump on the ICO bandwagon. In this article, a Silicon Valley cryptocurrency attorney discusses the pros and cons of ICOs to generate investment capital.

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In late 2018, CarrierEQ Inc. (Airfox) and Paragon Coin, Inc. were investigated and ordered by the SEC to make refunds available to their investors – in sum, the SEC’s order meant that Airfox may have to refund nearly 15 million dollars while Paragon would have to potentially refund 12 million dollars. These SEC reports highlight the importance of hiring an experienced blockchain attorney in this emerging field of law. From drafting your Articles of Organization to structuring your initial coin offering (ICO) or security token offering (STO), protecting the cryptocurrency of your clients with an experienced Silicon Valley blockchain attorney at Structure Law Group, LLP is essential.

Understanding Security Token Offerings (STO) & Blockchain Technology 

Unlike well-known digital currencies like Bitcoin or Ethereum, STO’s are security token offerings that allow companies to sell digital tokens to accredited investors prior to the digital tokens having any technical functionality.  This means STOs are often governed by federal security laws and must be registered with the SEC or find a proper exemption from registration. STOs are designed to function as traditional securities but are offered, sometimes in fractions, through blockchain transactions. Blockchain technology offers many benefits, including:

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