Initial Coin Offering Overview

August - 2017
http://www.tracyfirm.com

http://www.bitcoin-lawyer.org
 Market Cap (Billions)

Market Capitalization by Bitcoin 71

Cryptocurrency
Ethereum
(As of Aug 27 2017) 31

Bitcoin has increased over 3,000% since Bitcoin

2013 10
Cash
Early adapters continue to control over
60% of the $71 Billion asset class Ripple 9
This market faction has fueled
reinvestment in cryptocurrency i.e., 0 10 20 30 40 50 60 70 80
ICOs (Bitcoin is the primary currency
used in ICOs)
Market Cap (Billions)
ICOs have raised approx. $1 Billion
year to date
 Initial Coin Offering (ICO) Defined
An ICO is analogous to a traditional equity IPO where the Issuer sells cryptocurrency to fund
operations or repay initial investors.
ICO Issuers sell either a token which offer a right of ownership or royalties in a project or a
Capital Raise coin which offers the right of participation in a particular economy created by the Issuer.

An ICO is a public offering in the manner that solicitation is made to the public at large with the
objective being to fulfill pre-determined maximum offering.
Unlike traditional equity crowdfunding, the ICO issuer generally does not need to limit investment
Cryptocurrency pursuant to accredited investor definitions, but rather may solicit, offer and sell to any investor is
deems appropriate.
Crowdsale

The ICO is supported by myriad of exchanges willing to accept the coin or token for trading e.g.,
Bittrex, Kraken, Poloniex, etc. Exchanges allow for unsolicited peer to peer quotation trading much
like OTC Markets.
Listing on cryptocurrency exchanges do not required regulatory approval and can be accomplished
Liquidity Event quickly, allowing ICO investors and early investors platforms for creating liquidity.
 ICO v. Crowdfunding (Rule 506 Offering)
Initial Coin Offering
Non-Accredited investors may invest
No restriction on marketing activities
Coins/token are freely resold
No regulatory filing requirement
Raise unlimited amount in $ or cryptocurrency
Crowdfunding
Only accredited or sophisticated investors
No general solicitation allowed under law
Only restricted securities may be sold
Issuers must file Form D with state and SEC
Raise unlimited amount in $ only
 Initial Coin Offering Process
Coin/Token Prepare Offering White
Development Paper
Legal Formation Draft Offering Circular &
Related Docs
Founders Round
(Mining) Prepare Legal Opinions
Seed Investor Round

Blockchain & Pre-

Pre-Mine Announcement

Marketing
Offering, Listing
Campaign/Pre-
& Funding
ICO

Funding & Close Establish Exchange

Offering Arrangements
AML & KYC Engage Underwriters
procedures Being marketing
Coin/Token delivery campaign.
 Initial Coin
Premine Pre-ICO
ICO Offering

Timeline Weeks 1- 4
Weeks 4-8
Weeks 8-
16
 Legal Process Overview
Draft "white paper" which details current operations, nature of proposed coin/token, ICO offering parameters
and use of proceeds from ICO. Develop token supply, emission rate, blockchain and proof of stake.
Establish coin/token "trust" (typically, LP, LLC or statutory trust). Draft trust indenture or partnership
agreement.
Establish coin treasury and management company - ideally a limited liability company, which acts as beneficiary
of the coin/token trust and manages affairs of trust. Draft operating agreement and management/fee agreement.
Establish cash/escrow accounts, prepare organizational minutes and issue stockholder/member ownership
interests.
Draft coin/token offering circular/memorandum and subscription agreements. Draft Anti-Money Laundering
(AML) and Know Your Client (KYC) disclosures and internal process manual. Complete interested party
disclosures and indemnification agreements.
Identify and communicate with various exchanges to support ICO. Identify and communicate with various third
party promoters and market makers. Engage underwriter(s) and draft Underwriter Agreement. Engage escrow
agent and draft Escrow Agreement.
Draft mining pool agreements, exchange agreements, commission agreements. Draft and review marketing
materials and website terms and conditions. Draft and review subscription/investor agreements. Review investr
AML/KYC disclosures.
 Underwriting Process Overview
Cross functional team of securities and commodities professionals with over
one hundred (100) years combined sales offering experience. Experienced in
over twenty-five (25) ICOs to date.
Multi-jurisdictional operation to facilitate cross-border and offshore offerings
together with bilingual capabilities.
Tier one money center bank escrow operation ensuring custody of funds.
AML and KYC compliant operations.
Underwriting commission upon sale negotiable per project.
Tracy Firm Capability Ecosphere

Legal

Compliance Underwriting

Blockchain

Marketing Escrow

Listing
 Blockchain Legal
Turn-Key Initial Coin
Offering Solution
The Tracy Firm offers a wholistic Initial $100,000
Coin Offering solution ranging from coin or
token formation, legal to underwriting. in Coin*
The fee is payable in coin/token of the
Issuer at the ICO offering price or other
cryptocurrency/fiat currency upon
agreement. Fee does not include
government formation costs or exchange
costs. US5,000 refundable deposit Underwriting* Compliance
required upon engagement

*Does not include selling commissions

 Adam S. Tracy, JD, MBA
A licensed attorney, Certified Public Accountant and serial entrepreneur, Adam S. Tracy has
positioned himself as a leading cryptocurrency legal and compliance advocate. Starting as a oil and
gas trader for petrochemical giant BP, PLC, he created one of the early 2000s most prominent
unleaded gasoline hedge operations. Upon transitioning to the legal field nearly fourteen years ago,
Adam immediately built a active private practice which focused on, among other areas, fund
formation, initial public offerings and securities and commodities compliance. His many successes
include multiple NASDAQ initial public offerings and forming one of the now-largest Commodity
Trading Advisors in the U.S.

With the dawn of cryptocurrency, Adam was an early advocate and adapter, drawing on this
securities and commodities law experience to advise first movers and various Bitcoin matters.
Today, his cryptocurrency clients include well-known exchanges and some of the larger Initial Coin
Offering issuers to date.

Adam obtained his B.S. in Computer Applications and B.S. in Finance from the University of Notre
Dame. He obtained his Juris Doctorate and Masters in Business Administration from DePaul
University. Visit http://www.tracyfirm.com, http://www.bitcoin-lawyer.org or email
at@tracyfirm.com
 Initial Coin Offering F.A.Q.
How Long does it Take to Launch an ICO?
The answer is deal-dependent. However, the typical ICO can take as little as four (4) weeks from start to launch. Often times, it is advisable
to delay the launch of an ICO to allow for marketing efforts especially social media, to spread. Once launched, an ICO can be offered as
a long as the promoters elect to have the offering open, or until the ICO is sold out.
Is Cryptocurrency a Commodity or a Security?
The Commodity Futures Trading Commission issued an order in September, 2015 classifying Bitcoin and similar cryptocurrencies as
commodities, as opposed to securities. Thus, the Commodities Act and the rules promulgated by the CFTC may provide the compliance
framework for ICOs. As such, those entities wishing to undertake an ICO must be cognizant of issues such as the licensing requirements
for Commodity Futures Merchants or Commodity Trading Advisors, which proponents of ICOs would be wise to seek to avoid. Notably,
the CFTC does not regulate private transactions in commodities or forward contracts when made for delivery within 28 days which
exempts most cryptocurrency exchanges from regulation.
Does the SEC now Regulate ICOs?
The Securities and Exchange Commission recently held an Initial Coin Offering to be an offering of securities, as opposed to commodities.
The decision was made based on the nature of the blockchain of the ICO in question which was invariable a centralized token as
opposed to a coin or decentralized token. The implication is important, but does not subject all future ICOs to SEC oversight. I explain
in greater detail here.
Can a Publicly Traded Company Initiate an ICO?
Any entity, whether privately held or listed for trading on any national or international exchange may initiate and raise capital through an
Initial Coin Offering.
Where can I find more Information?
Visit your YouTube channel or contact us at@tracyfirm.com
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