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Dodd-Frank

A Review of Initial Coin Offerings (ICOs)

by   |   July 31, 2017

Given the SEC’s investigative report on initial coin offerings, I thought it would be interesting to review a small sample to see what else is really out there. I turned to coinmarketcap.com for information. In many cases the offering of coins has been completed.

We have also published a summary titled “When is an Initial Coin Offering a Security?” I omitted describing offerings that clearly appear to be a security from the summaries below.

EOS

EOS.IO is software that introduces a blockchain architecture designed to enable vertical and horizontal scaling of decentralized applications (the “EOS.IO Software”). This is achieved through an operating system-like construct upon which applications can be built. The software provides accounts, authentication, databases, asynchronous communication and the scheduling of applications across multiple CPU cores and/or clusters. The resulting technology is a blockchain architecture that has the potential to scale to millions of transactions per second, eliminates user fees and allows for quick and easy deployment of decentralized applications.

What does EOS stand for? EOS believes that EOS means different things to different people. EOS has received numerous amazing interpretations of what EOS stands for or what it should stand for so EOS has decided not to formally define it.

According to the website, the EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform.

U.S. citizens, residents and entities are excluded from purchasing EOS Tokens in the token distribution because of some of the logistical challenges associated with differing regulations in the many states of the United States of America. The sponsor does not believe that the distribution of EOS Tokens or the EOS Tokens themselves are securities, commodities, swaps on either securities or commodities, or similar financial instruments. According to the website, EOS Tokens are not designed for investment or speculative purposes and should not be considered as a type of investment.

QTUM

Qtum is a hybrid blockchain application platform. Qtum’s core technology combines a fork of bitcoin core, an Account Abstraction Layer allowing for multiple Virtual Machines including the Ethereum Virtual Machine (EVM) and Proof-of-Stake consensus aimed at tackling industry use cases.

QTUMs are cryptographic software tokens used to engage with distributed applications (“dApps”) and smart contracts on the Qtum platform. QTUMs will serve as the staking currency of the Qtum blockchain and fuel computational operations performed by the Qtum network.

The development and maintenance of the Qtum Blockchain, as well as all services provided by Qtum, are directed and supervised by the Qtum Foundation – a non-profit organization, representing Qtum’s stake and token holders.

Veritaseum

Veritaseum is a smart contracts-based, peer-to-peer wallet interface (in beta) that currently interacts with Bitcoin blockchain (to be ported to Ethereum). It allows non-technical individuals and entities to quickly create, enter and manage smart contracts directly with others without an authoritative 3rd party.

This offering, which is completed, is closest to a prospectus, and includes risk factors.

Veritas are redeemable solely to Veritaseum LLC for various products and services offered by Veritaseum LLC, or to access various features or aspects of the Veritaseum Platform or other Veritaseum LLC software products.

Ownership of Veritas carries no rights, express or implied.

Veritaseum LLC will cooperate with all law enforcement inquiries, subpoenas, or requests provided they are fully supported and documented by the law in the relevant jurisdictions. In accord with one of the core principles of the Veritaseum project transparency—Veritaseum LLC will endeavor to publish any legal inquiries upon receipt.

Gnosis

Gnosis.pm is a decentralized prediction market built on the Ethereum protocol. Gnosis provides an open platform for anyone to predict the outcome of any event and plans to drastically simplify the creation of customized prediction market applications. A prediction market allows users to buy and trade binary positions on the outcome of any arbitrary event.

This website claims instead of building on a rent extracting platform, Gnosis makes it possible to make a one-time purchase of a sufficient amount of GNO tokens and then use the generated WIZ tokens to pay for Gnosis fees. At a very basic level, GNO tokens function as fee credit (WIZ) generation machines. As a result, GNO tokens give access to the platform at a fixed cost, comparable to holding a license.

The site also states GNO tokens are functional utility tokens within the Gnosis platform. GNO tokens are not securities. GNO tokens are non-refundable. GNO tokens are not for speculative investment.