Humans have found weird ways to make money. One American got companies to pay him to wear a branded shirt each day and advertise it, while a young British entrepreneur created a website over a decade ago that sold one million pixels of advertising space for $1,000,000.
Equally as bizarre is people selling ‘themselves’ on Ethereum. Some love the idea, others don’t (for good reason).
Ethereum Users Are Selling Themselves… Kinda
One of the beauties of Ethereum is that anyone can create a token for anything.
Witty entrepreneurs in the cryptocurrency space have acknowledged this, issuing coins representing equity in themselves dubbed “personal tokens.”
In April, Alex Masmej raised $20,000 within four days through the sale of the ALEX token to 29 individuals. The $20,000 is money that will be spent on creating a decentralized finance (DeFi) startup in Silicon Valley.
ALEX represents “a blend between a small Income Sharing Agreement and a human IPO,” the entrepreneur explained, referencing the premise of the token, which is to distribute 15% of all his income for the next three years to a maximum of $100,000.
Masmej is being joined by Kerman Kohli, an Ethereum DeFi specialist and newsletter writer who is looking to sell $30,000 worth of KERMAN tokens in the wake of the success of ALEX.
Kohli is attempting to differentiate himself from his predecessor by trying to drive value to token holders in other ways, like through burning KERMAN tokens, allowing for holders to influence his life, and by allowing certain holders the ability to join an exclusive Telegram group.
There Are Legal Drawbacks
Although the people running these sales may be on a great career trajectory, these tokens don’t come without their own set of risks. Namely, there’s a legal element involved in these tokens as many of these coins are essentially a claim on someone’s future earnings.
Yes, there is about a 0% chance the Securities and Exchange Commission or any similar entity has done any research into personal tokens, but there are apparently dangers in selling tokens that represent oneself.
Jake Chervinsky, general counsel at Ethereum DeFi application Compound and a long-time Bitcoiner, published the tweet below on May 5th, indicating that those selling personal tokens should not do so in the United States:
Not legal advice, but if you’re thinking about raising capital by selling a personal token in the United States to fund your career on the promise of returning profit to investors based on your future efforts, maybe just don’t.
Not legal advice, but if you're thinking about raising capital by selling a personal token in the United States to fund your career on the promise of returning profit to investors based on your future efforts, maybe just don't.
— Jake Chervinsky (@jchervinsky) May 6, 2020
He added in a later tweet that these tokens are clearly investment contracts, which means they will likely get flagged by the SEC should enough noise be made on the subject.
David Hoffman, COO at real estate tokenization platform RealT Platform, echoed this skepticism, this time looking to the structure of the coins themselves.
He suggested that while these tokens are a claim on someone’s future career, there is no guarantee they will be honest in paying out dividends or won’t run away with the up-front payment.
Hoffman asked somewhat rhetorically:
Ask yourself: if you got an upfront payment of $30k (so you could probably just go long ETH), and you had no strong accountability to hold up your end of the bargain, are you really going to fairly honor your “personal token” for the entire term of the contact?
The post Ethereum Users Are Selling Tokens of Themselves: What are the Legal Drawbacks? appeared first on Blockonomi.
May 06, 2020 at 12:45PM https://blockonomi.com from Blockonomi https://ift.tt/2Wa2Y9C
Comments
Post a Comment