If you are reading this, it’s likely you already are aware of what an ICO bounty is and what it entails.
For the under-informed, a bounty on a token or coin offering is simply this: a commission paid to an individual or group of individuals for promoting a coin or token offering.
It’s the unregistered equivalent of a selling agent who is part of an underwriting syndicate in a traditional IPO. Promoters get paid commissions for finding investors to a deal. Social media channels have been the largest
There are several legal and risk issues inherent with a bounty, which I will discuss below. Keep in mind, most of these are discussed through the lens of United States securities laws. This is not legal or investment advice, but likely practically good advice, regardless of where you stand on thing related to ICO bounties.
Blockchain companies looking to utilize a bounty incentive program for promoting their initial coin offering (ICO), should first consider the following:
The previous questions are critical for understanding the risks associated with your ICO bounty and paying commissions to those promoting an offering.
Even if an issuer elects to pay a foreign finder to bring foreign investors (not U.S. investors), there is likely little no control over the marketing message–which represents a huge risk in and of itself.
As a promoter or potential promoter, it is critical to ask the following questions:
As a promoter or potential promoter of an ICO bounty, it is important to understand your legal exposure past, present and future. If you are a United States citizen who is promoting and selling tokens for a commission to United States citizens, there is a problem.
While it is technically legal for a unregistered foreign finder to receive a commission from a U.S.-based entity or broker for promoting a security to foreign nationals on a U.S.-based deal, there are other risks to consider, including: foreign securities laws & jurisdictional oversight, promoter background and promoter marketing tactics.
As a U.S. citizen, it is best advised to steer clear of bounties altogether. It represents a web of potential liability that is not worth the potential commission involved. This is one of several reasons to engage an investment banker in your initial coin offering.