ARE INITIAL COIN OFFERINGS SECURITIES?

To answer this question we must look at what securities are: generally speaking securities are debt or equity investments in a company wherein the investor puts up cash to obtain both voting control and a share of the profits whether in dividend or distribution form or a right to specified guaranteed payments. Shareholders buying equity securities have the most risk and the greatest possibility for reward, which is the general nature of investing: the higher the risk the higher the potential reward. Debt securities offer lower risk to investors, due…

WASHINGTON STATE INSTITUTES CRYPTOCURRENCY EXCHANGE RULES

In a daunting move that is certain to put a crimp into open-source blockchain, on July 23rd, 2017, Washington  passed regulations that all currency exchanges doing business within its borders must now obtain a state license from the State Department of Financial Institutions and submit to regular third-party audits of “all information and data systems”. Further, a bond must now be put up by any cryptocurrency exchange doing business in that state, which depends on the amount of currency that passed through it in the prior year; another burdensome requirement…

FUNDRAISING VIA INITIAL COIN OFFERING (ICO)

The general method of fundraising equity for a startup venture is either to go through Regulation A, Regulation D, or Title III for crowdfunding ventures. Reg A applies to non-accredited investors, and Reg D is mostly for accredited investors with a small carve-out in 506(b) for a small number of non-accredited investors. Title III investors do not have to be accredited but certain investment limits are required based on the investor’s income. Generally the fundraising amounts are limited in Reg A, unlimited in Reg D, and limited to $1 million…

INTRODUCTION TO THE CRYPTOCURRENCY BLOCKCHAIN

The most basic answer is that the blockchain is a publicly viewable, decentralized ledger which lists every transaction that is executed using a given cryptocurrency and which is made valid through multiple confirmations from decentralized computing power generated by users and/or miners of that currency. There is a fee for confirming each transaction which is split among those users/miners who process that transaction code which gets longer and longer and is digitally recorded forever. The process is simple although there is a great deal of computing power and mathematics-based algorithms…

BEST LEGAL ENTITY STRUCTURE FOR YOUR VENTURE

This question is usually overly complicated by clients and attorneys when the answer is usually quite simple: for the vast majority of small business start-ups an LLC will be perfectly sufficient for most purposes due to its reduced cost of formation, management, paperwork, and tax filing flexibility. In situations where a passive asset is to be acquired, such as real property, a business vehicle, equipment that will be rented back to the business, etc., then an LLC is unquestionably the best choice as a holding company. Holding business assets in…

COLLECTING ON A JUDGMENT

If the judgment is against an individual then the creditor may record it in the county records, ruin the defendant’s credit, try to garnish wages, collect the defendant’s assets, continue to check periodically to see if defendant has come into some money or acquired new assets… This is an ongoing and costly process, and much of the time yields nothing. For one, the defendant can simply leave the country and the judgment is worthless, or the defendant can hide his assets by placing them under a 3rd party’s control or…

QUI BONO – WHO BENEFITS FROM LITIGATION?

The reader may have idealized notions regarding the American justice system, although that would be rather naïve in this day and age. The general consensus is that if we go to court then justice should be done and the appropriate parties will be penalized and remunerated. Only discussing the civil court system at this point, we expect that a business or personal dispute will receive a full review and a fair and just resolution, under the watchful eye of the judge and the integrity of our peers the jury. Well…

WHO CONTROLS LEGAL REPRESENTATION?

The answer seems to be clear: you, the client control the manner and course of your representation. However, most clients are loathe to openly disagree with their legal counsel due to the inherent trust that the attorney has an obligation and the capacity to look out for their best interests, and is in fact doing so. Here is a news flash: you are the best expert on your own legal situation. The attorney likely has numerous clients and keeping track of every detail of every legal matter is simply impossible.…

SELECTING THE RIGHT ATTORNEY FOR YOU

The legal market is saturated with lawyers scrambling for clients; unfortunately customer service is rarely on the agenda. Beyond competence (most attorneys have this) and legal fees, a prospective attorney should also be evaluated on other levels such as personality, friendliness, communication style, listening skills, and willingness to go the extra mile. Personality is hit or miss; if you just don’t seem to like the attorney personally and the legal relationship is intended to be long-term, then chances are high there will be conflict in the future. Rapport with your…