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> without diluting If the tokens don't grant a stake in Telegram's business, does this mean the ICO is essentially an independent system (where tokens have val
by jkarneges 8y ago
> without diluting
If the tokens don't grant a stake in Telegram's business, does this mean the ICO is essentially an independent system (where tokens have value regardless of how Telegram performs as a business), and only loosely related to Telegram in the sense that their name was used to initially promote the opportunity?
- luka-birsa 8y agoYes. ICOs give investors (better said: "token purchasers") no security rights. This is a point of contention between people running ICOs (tokens have utility value and are used to pay for services) and regulators (ICOs do not pass the Howey test [1] and are securities). Right now token purchasers are either buying the tokens for the purpose of use or buying them speculatively with the purpose of the price going up over time as usage increases. Token issuance vehicles (companies) are oftentimes separated from the entity that is running the business to reduce legal exposure. [1]: https://consumer.findlaw.com/securities-law/what-is-the-howey-test.html https://consumer.findlaw.com/securities-law/what-is-the-howe...