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Legal support of ICO (TGE)

Legal support of ICO (TGE)

The development of the cryptocurrency market have led to the emergence of opportunities for all startups to get investors for your project and spend your own ICO (Initial Coin Offerings), i.e. to the organization of the process of the issuance by the company of its own scriptactive with the purpose of raising funds. And despite unified standards for the ICO, each project, as well as every token can have a number of individual characteristics. It is therefore important at the stage of preparation for the ICO the right to make a contract offer, and to correctly identify civil-legal form of the electronic contract in the format of a click-wrap (interactive terms on the site, the consent which is done by pressing the "conciliation" on-screen buttons)) and browse-wrap (interactive terms on the site with which the user expresses consent in an explicit form, but does not put a Daw in a separate window) agreements.

Despite the fact that the national law of most countries and international treaties are not provided until the present time, independent provisions for the regulation of order of carrying out and participation in ICO, many regulators have already begun to develop new approaches on the basis of existing legislation.

For example, in the USA, Canada and Singapore, the issue of scriptaction under certain criteria may amount to a securities issue, with all its duties and responsibilities. This led to the formation of alternative approaches to krausel and attract new investors for their projects.

Not any token issuance under TGE (Token Generation Event is a more correct name for the common categorization for such activity) can be legal in the countries where potential investors. In addition, despite the fact that the ICO/TGE gives greater freedom to the organizers of the project for attracting investment in cyberspace to create a blockchain-projects, there are many worldly issues that need to organize: define the corporate governance structure, to determine the Bank and order a withdrawal in Fiat in a Bank account for the payment of current expenses and work of team to clean and protect intellectual property rights on the product.

It is necessary to take into account that, for example, even if ICO is not aimed at the American market, and the company that owns the service, is located in the EU or Asian countries, it can still apply FATCA (tax reporting on foreign Bank accounts), which obliges any company, or otherwise open accounts for American citizens, to report to the US tax authorities.

In addition, the Convention on combating money laundering and financing of terrorism laws, which was joined by almost all countries of the world, provide for the observance of a number of measures that obligate you to collect information about the customers (Know Your Customer and Anti-money-laundering) tokens.

What is included in the service:

  • analysis and definition of the legal nature of the token through the prism of the "Howey test" to exclude the classification of a token as securities (e.g., SEC for The DAO and practices in the EU for the recognition of ICO one of the forms of IPO);
  • creating the risk matrix of the project;
  • selection of optimal jurisdiction of the Issuer of the token and the Bank's jurisdiction, which are output in the Fiat;
  • development of a corporate structure in accordance with the existing regulation of controlled foreign companies (including PSC requirements, FATCA, etc.);
  • development of corporate (including statutory) documents for the ICO/TGE, registration of companies and assistance in opening Bank accounts;
  • initial development, legal analysis, and improvement “Whitepaper”;
  • initial development, legal analysis, and revision of the privacy Policy (on the processing of personal data) in accordance with national law at the seat of the company;
  • initial development, legal analysis, and revision of the TOS (User agreement) that defines the General conditions for the provision of services under the ICO/ TGE and use of online platform;
  • initial development, legal analysis, and revision of public offers and agreements of purchase and sale of tokens, including electronic contracts in a format of click-wrap and browse-wrap agreements;
  • initial development, legal analysis, and revision of NDA and employment/outsourcing agreements (NDA) for the command and staff of the ICO in order to protect the privacy of confidential information and trade secrets about the project;
  • optimization of tax costs in working with companies with foreign capital;
  • compliance (confirmation of the compliance of the company rules of national law and standards of international law) and .the development of the necessary measures related to the combating of the laundering of proceeds of crime (LMR) and the financing of terrorism, as well as customer verification (KYC);
  • risk management of holding ICO/TGE, as well as the development of measures to minimize possible negative legal consequences (including criminal) for the beneficiaries and managers ;
  • the trademark project and the provision of legal protection of results of intellectual activities created in the framework of the project;
  • mediation and dispute resolution related to ICO/TGE, including in the framework of arbitration and arbitration proceedings, administrative relations with regulators, and drafting of the arbitration clause and the contract clause of jurisdiction to choice of law and venue disputes;
  • legal accounting with the use of messengers/social.networking/e-mail (training and operational direction of a legally sound projects to investors) within the framework of the ICO/TGE.
  • The exact amount of necessary actions for the project are determined after studying the documentation, and business scheme of the project as well as consultation with the Customer.

Cost of services:

depends on the volume of services and their delivery time agreed with the Customer.

Order of payment:

the lump-sum payment

royalties after launch.

Possible option consideration payment of royalties to the tokens of the project.