Risk-Free Crowdfunded Cryptocurrency?

Risk-free investment? Not so sure.

There’s a new cryptocurrency being promoted called the “Dynamic Coin Offering” that is promising that “to safeguard retail investors from the inefficiencies of the yesteryear crowdfunding mechanisms.”

It claims that 80% of the funds raised will be put aside to buy back any investor’s token should they be unsatisfied with their purchase and that there would be a “price floor that enables investors to claim a risk-free profit whenever the market price of the token falls below 20% of its initial price.”

This assumes that the money will be there when the buy-back is triggered and supposedly would encourage traders to trade the token above its floor at all times.

And although these are considered to be “money-backed tokens,” they are not stable coins, in that they don’t necessarily have fiat value after issuance.

Screen Shot 2020-05-27 at 8.28.42 AM

The article below attempts to suggest that Dynamic Coins are utility tokens that would not be “securities” needed to be registered with the Securities and Exchange Commission. We’ll see if the staff of the SEC would agree….

(No endorsement implied, of course.)


About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at: http://www.linkedin.com/pub/jeffrey-a-koeppel/0/63/5a9
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