Legal support ICO (TGE)

The development of the cryptocurrency market has led to the emergence of opportunities for any start-ups to quickly attract investors for their project and conduct their own ICO (Initial Coin Offerings), that is, to organize the process of issuing the company’s own crypto assets in order to raise funds. And despite the uniform standards of ICO, each project, as well as each token, can have a number of individual features. That is why it is important at the stage of preparation for the ICO to correctly draw up an offer agreement and correctly define the civil-legal form of the electronic contract in the format of click-wrap (interactive conditions on the site, the consent of which occurs by clicking the “conciliation” screen button)) and browse-wrap (interactive conditions on the site with which the user expresses consent in an explicit form, but does not put a tick in a separate window).

Despite the fact that the national law of most countries and international treaties does not provide to date independent provisions for the regulation of the procedure for conducting and participating in the ICO, many regulators have already begun to form new approaches based on existing legislation.

For example, in the United States, Canada and Singapore, the issuance of crypto assets under certain criteria may equate to the issuance of securities, with all the ensuing responsibilities and responsibilities. This has led to the formation of alternative approaches to crowdsale and attracting new investors for their projects.

Not any issue of the token within the TGE (Token Generation Event seems to be a more correct name for the general categorization of such activities) may be legal in countries where potential investors are located. In addition, despite the fact that ICO/TGE gives great freedom to the organizers of the project to attract investments in cyberspace to create blockchain projects, there are many “earthly” issues that need to be properly organized: to define the corporate management structure, to determine the bank and the order of withdrawal of funds to the fiat in the bank account to pay for the running costs and work of the team, to clean up and protect the intellectual rights to the product.

It should be taken into account that, for example, even if the ICO is not directed to the American market, and the company that owns the service is located in the EU or Asian countries, it can still be applied to FATCA (the law on tax reporting on foreign accounts), which obliges any companies, one way or another opening accounts to American citizens, to report to the U.S. tax authorities.

In addition, the Convention on Anti-Money Laundering and Terrorism Financing, which has been joined by almost all countries in the world, enforces a number of measures that oblige the collecting of customer information (Know Your Customer and Anti-money-laundering) tokens.

What is included in the service:

• analyzing and determining the legal nature of the token through the “Howey test” prism to eliminate the classification of the token as a security (e.g., the SEC’s DAO practice and the EU’s practice of recognizing an ICO as a form of IPO);
• Creating a project risk matrix
• Selecting the optimal jurisdiction of the token company and the jurisdiction of the bank, in which the fiat is withdrawn;
• Develop a corporate structure in accordance with the existing regulation of controlled foreign companies (including PSC, FATCA, etc.);
• Development of corporate (including statutory) documents for ICO/TGE, registration of companies and maintenance of opening bank accounts;
• initial development, legal analysis, and whitepaper refinement;
• initial development, legal analysis, and refinement of the Privacy Policy (inc., processing of personal data) in accordance with national law in the company’s location;
• initial development, legal analysis, and refinement of the TOS (User Agreement), which defines the general terms of ICO/TGE services and the use of the online platform;
• initial development, legal analysis, as well as the refinement of public offers and agreements on the purchase and sale of tokens, including electronic contracts in the format of click-wrap and browse-wrap agreements;
• initial development, legal analysis, and refinement of the NDA and labor/outsourcing contracts (non-disclosure agreement) for ICO team and employees for the purpose of not disclosing confidential information and trade secrets about the project;
• Optimizing tax costs in working with a company with foreign capital;
• Compliance with the company’s compliance with national law and international law standards and .developing the necessary measures to counter the laundering of proceeds of crime (LMR) and financing of terrorism, as well as customer verification (KYC);
• Develop a legal mechanism for the return of the koin attracted, in the event of a lack of a minimum result;
• risk management of ICO/TGE, as well as the development of a system of measures to minimize possible negative legal consequences (including criminal) for beneficiaries and managers;
• Registration of the project’s trademarks and legal protection of the results of intellectual activities created within the project;
• ICO/TGE-related mediation and resolution, including arbitration and arbitration proceedings, administrative relations with regulators, and the development of arbitration clauses and contractual jurisdiction clauses to select applicable law and venue;
• legal accounting using messengers/social networks/e-mail (preparation and prompt referral of legally sound projects to investors) within the framework of ICO/TGE.
• The exact amount of necessary actions on the project is determined after studying the documentation and business scheme of the project, as well as consultation with the Customer.

Cost of services:

determined by the volume of services and the time required to provide them, in agreement with the Customer.

Payment:

lump sum payment

royalties after the launch of the project.

It is possible to consider the option of paying royalties in the project tokens.