Adam Tracy Revisits Airdrops & Bounties

https://www.youtube.com/watch?time_continue=14&v=RC--rgzCI7M

Cryptocurrency attorney Adam Tracy revisits the legalities of airdrops and bounties used in connection with Initial Coin Offerings and discusses the legal implications of Security Token Offerings.

— —

A former competitive rugby player, serial entrepreneur and, trader attorney, Adam S. Tracy offers over 17 years of progressive legal and compliance experience in the areas of corporate, commodities, cryptocurrency, litigation, payments and securities law. Adam’s experience ranges from commodities trader for oil giant BP, initial public offerings, M&A, to initial coin offerings, having represented both startups to NASDAQ-listed entities. As an early Bitcoin adapter, Adam has promoted growth of cryptocurrency and offers a unique approach to representing crypto-clients. Based in Chicago, IL, Adam graduated from the University of Notre Dame with dual degrees in Finance and Computer Applications and would later obtain his J.D. and M.B.A. from DePaul University. Adam lives outside Chicago with his six animals, which is illegal where he lives.

Primary website: http://www.tracyfirm.com

Twitter: https://twitter.com/TracyFirm

Youtube: https://www.youtube.com/channel/UCVOa...

Linkedin: https://www.linkedin.com/in/adamtracy/

Facebook: https://www.facebook.com/thetracyfirm/

Instagram: @adamtracyattorney

Telegram: @adam_tracy

Skype: @adamtracyesq

Email me: at@tracyfirm.com

TRANSCRIPTION:

So just a quick update on air drops, and I got a lot of questions off my first episode — it was talking of the legality of air drops. And a lot people brought up the free stock concept, right? And for those that maybe aren’t familiar, during the dot com bubble, there was a series of SEC administrative actions against companies that were providing quote on quote free stock. And stock wasn’t totally free. What they what had do to get the free stock for these dot com companies was sign up at their website, link your to their website, and do some other menial tasks. And one of the actions was called wowoption.com, and the SEC came in and halted those defacto air drops in the sense that they were securities offerings. And the same can be said for airdrops and bounties, to a lesser extent, with respect to tokens that are deemed securities. So the question, you know, that I was received is, I’m doing a security token offering can I do an airdrop? And the answer is you have to very careful, and probably not. The reason being that consideration is still being given, right, just because there’s no money or BTC or F involved, doesn’t mean that there isn’t consideration for token, right? You’re obtaining some minuscule benefit from it, but you’re still, you know, receiving consideration for the issuance of that token through the air drop. So if you do have a security token you truly have to give it away for free, like you literally would have to receive no consideration for it not to be an offering. And if it’s offering of securities then, of course, you have to worry about Reg D, who you’re doing with, are they accredited, how you’re promoting it, how your marketing it and all that, which in an air drop you’re seemingly not going to do that, because there’s just such an incrementally small benefit from the tasks that are being performed in exchange for a token. So, you know, the security token concept in that environment, airdrops really are verboten, right? You can’t really do them because you can’t monitor that offering — you can’t comply with securities laws in that offering. And if you did, it’d be a very limited air drop. So, you know, be careful, especially if you’re going to call it a security token. I would shy away from an airdrop and bounty program altogether probably. In the utility token context, you know, again, it’s more of a loyalty rewards type arrangement where you’re earning loyalty rewards points or tokens, as you will to make it work. So I still think it’s a viable means of marketing and a viable means of getting a, you know, token holder base. So definitely check it out. But if you have any questions, be sure to hit me up. My contact information is in the description. at@tracyfirm.com. TracyFirm.com.