Bitcoin Forum

Hey ppl,

when a company launch an ICO and received millions worth of crypto and will need to convert it to fiat currencies for execution of their business plan, how do they do it?

I am curious coz most banks would have a lot of questions on Source Of Fund (SOF) and Source Of Wealth (SOW) and the nature of ICO won't allow the banks nor the ICO companies to "peel down" the layers and expose the contributors?

I understand that some companies will keep the proceeds from ICO in crypto, but the majority would need some form of fiat to execute day-to-day business.

You have exchanges such as Kraken and Gdax where you can trade crypto's for fiat.

They can create a new tokens for us to invest in so surely they can create a new exchanges to turn all their coins into fiat or at least they will make sone markets list their coins on them so that they can start to exchange.

they can convert it to fiat through large exchange, also they can through OCT

Most of these ICO companies found in tax heavens so don't expect any government regulation. They can cash out via any reputable exchange. It's not illegal to sell Bitcoin or Ethereum.

Its a mix of selling on the exchanges along with OTC. Most of the coins are sold in the OTC market, that is where the REAL WHALES make the trades.

Because that is the only way to make sure big dumps don't crash the market, its either that or sell off tiny chunks over crazy long periods.

I think most ICO cash out only as they need though so exchanges are probably good enough.

I think the ICO companies will sell the crypto currencies to fiat in some big exchange, maybe on the Poloniex, sell the ETH and get the USD, but I do not think they will sell a lot of ETH in a short time, it is not so wise to do that because of the limited USD they will get.

Well, you can check their funds after crowdsale still holding Ethereum from crowdsale or sell all. I know with really project, they usually holding Ethereum in long time and just sell when they need money for develop their project.

They could cash with Fiat because the investor is paying them with Bitcoin and Ethereum,
And they could easily withdraw it with any trading site that they want.

I don't know whether you are asking as a result of curiosity or because you are intending doing one but at the same time as easy as the people above have rightly said, but I must say its never easy to do because the legitimate ones might not even have access to the funds for a long period of time due to an active escrow ensuring the funds is released in trench of  works to be completed  but if you are able to pull that off then you can go through with the various methods suggested for you.

thanks for everybody input.

I am aware that bigger exchanges allow OTC for cashing out your crypto to fiat. however the "money journey" does not end there.
Once your asset is changed to fiat, it has to move into a bank account, that's where the issue might potentially come in.

Banks (or rather most banks) would query on your source of fund and source of wealth. from an AML perspective, it is difficult for the bank to ascertain the source of funds since it is from various unknown sources.

I am exploring this topic coz there are other threads on the influx of penny coins, shit coins, etc etc.... however you want to name it. Authority is not able to regulate ICOs, however they could tighten AML regulations at banks making ICO exit a painful process.

Hi HEROinME,

It is very true that some ICOs will face difficulties cashing out their funds with normal banks. Banks will shut companies without warning if they are unsure about the source of funds. I work for Bitwala.com and we already offer payout services for ICO companies. We have transferred over €65 million in the last years and have a great track record. If anybody has any questions about us and our service please contact us at business@bitwala.com

I think the  ICO companies cash out their crypto currencies to fiat , sell it in big  exchange as real time trading price and they can also instantly withdraw your funds to a payment card .

That's when the exchanges comes in. These exchanges like kraken, bittrex, poloniex, etc. are where these companies change it to fiat. Most of the ico run under ethereum so mostbof the companies hold the eth and exchange some for business use.

Very important thread I have seen in the recent days. Yes source of income is very important.As it is an ICO, where start up companies offer their shares and collect funds, so it can easily be shown as source of income same as an IPO. This is what I think.Corrections are acceptable. But I dont know how  people who invested in ICO and gain profits show their source of Income.What can they show as source of Income.Trading? or Investment? What is the difference when it comes to tax? Hope somebody will answer

I'm not a financial genius. And I do not know how the tax controls this flow of money. But I think this is very far from legal business. This money is likely to be cashed by an offshore company and then invests in a "white investment" project.
Let's hypothetically imagine that, in the crypto currency market, some kind of coin disappears. How do you even prove that this particular company produced exactly this coin and that you invested money not in a coin that can be renamed or destroyed, but in a real project and waited for real dividends. It's not easy to answer these questions. Who from this forum went to the tax and paid income tax? I do not think so.

For the sake of promoting their project and cryptocurrencies like bitcoin or Ethereum am sure when they get into development of the project they payout using crypto coins and cash out through bank transfers but AFAIK from the millions they collect they do not spend everything at once and most likely money is spent in small chunks to make accountablity to be easy.

Good question, most of them have some sort of tie up with the bank, just like the normal corporates who have the overdraft facility, these ICO companies have this facility as well. And the bank approves it if the particular ICO company has been certified by the regulatory authority of the country. I'm not sure if it's hundred percent correct but this should be the procedure.

it's not that big of a deal if your bank is crypto friendly. You can sell your tokens (ETH uasualy) at any reputable exchange and then withdraw fiat money to your bank account. You will probably have to pass some kyc/aml procedures, but it should be ok if your bank is , as mentioned, crypto-friendly.

If not, refer to Mistertango.com. We (btc exchange) have partnered with them for crypto related transactions. They are crypto friendly, but all the regular AML/KYC procedures is still a must.

They might be distributing their holdings to most of the exchanges,circulate and cashout it little by little so the IRS wont notice any of their moves,they are safe to taxes which if they were caught would give us dooms,the exchange would surely be closed by the government for tax evasion.

I'm not sure but BitcoinSuisse can also one the options for cashing out.

i think cashing out thru exchanges is very likely option, however it is how you move funds from exchange to the banking system. You would have to explain source of fund and source of wealth, once bank gets wind of funds originating from ICO, red flags!!! and most likely the account will be closed off.

As it is quiet free from government interference so it is easy for ICO to cash out .I think exchange s are playing friendly relation in this procedure.