How Initial Coin Offerings May Utilize Regulation D Exemptions

What follows is NOT investment or financial advice and is merely for informational purposes only. Please seek professional advice when making decisions regarding the issuance of securities. For the uninitiated, an Initial Coin Offering (ICO) is a method used by startups and developers to raise funds from investors in exchange for tokens or custom cryptocurrency. The tokens acquired in the ICO generally grant the buyer some special privilege(s) on the issuer’s platform. The debate of whether these tokens are securities or not and the legality of performing an ICO are almost as old as the practice itself. Recently, the SEC has been busy issuing subpoenas to firms that conducted ICOs in the past and that the SEC believes may have violated securities laws. With no definitive rules to guide them, startups and developers contemplating raising funds via an ICO may wonder how they can do so and stay out of the crosshairs of the SEC. Before conducting an ICO the issuer should…

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