A blockchain services company agreed to pay nearly $30 Million in disgorgement, penalties and interest for failing to register its initial coin offering pursuant to the securities laws. The firm marketed the potential for future profit in the tokens as it successfully developed the underlying business platform. The firm unraveled due to litigation against one of its founders, which resulted in the awarding of significant damages for breach of fiduciary duty and conversion. Because the offering promised a reasonable expectation of future profits based on the efforts of others, the SEC argued that the tokens were securities, and the offering required registration.
For Pete’s sake, hire a securities lawyer or a compliance professional! Some of our best and most successful clients are fintech companies. They hire us because they are not expert in the comprehensive securities regulations that govern the “fin” part of their businesses. If you plan to get into finance, get some professional help.