Airdrops and SEC

[panleya]

I read a lot about the SEC cracking down on ICOs.  What does the law say about Airdrops?  Assume, for the sake of argument, that the token is considered a security (which the SEC most definitely WILL assume).  Any knowledgeable feedback is appreciated.

[stronghands4lyfe]

Wouldn't airdrop just be classified as a gift you received from somebody? Disregarding the structure of the token or the coin I believe that is how we should view it. If the token or coin however, is paying dividends then most certainly it would be classified as a security.

[renes]

You sell the tokens and go before price crashes as well but that is not a problem, most people just issue them as a utility token not a security. They care about the money they get no whatever token they issue  

[panleya]

You sell the tokens and go before price crashes as well but that is not a problem, most people just issue them as a utility token not a security. They care about the money they get no whatever token they issue  

The moment a token is placed on an exchange it becomes a security.  The SEC is labeling almost all tokens as securities and has begun the process of going after ICOs.  I'm operating under an assumption the SEC labels a token as a security and asking if airdropping security tokens is a violation of law.

[ETHtotheMOON1]

I read a lot about the SEC cracking down on ICOs.  What does the law say about Airdrops?  Assume, for the sake of argument, that the token is considered a security (which the SEC most definitely WILL assume).  Any knowledgeable feedback is appreciated.

It would depend on the nature of the airdrop but I don't think many of them would be treated as securities. They would be rather considered the same way as bitcoin currency

[sparkystacey]

Airdrops are not a new tactic. Since the 90s some companies have used the tactic to provide stock as rewards for marketing or other efforts. The SEC cracked down on those where the security did not follow the rules.

See the press release from 1999 where they cracked down on 4 cases where the stocks did not follow the rules: https://www.sec.gov/news/headlines/webstock.htm

The bottom line is that it is imperative that you follow the rules, with respect to investor rights and ensure your coin truly is a token. If you do that, airdrops will be protected. If you don't, you provide reasons for the SEC and the CFTC to come after you.

That said, airdrops should be an area of caution. Just last month, Rise and Bittrex had to unwind airdrops because the way it was handled violated SEC regulations, and they had to halt their airdrop to stay listed. https://steemit.com/cryptocurrency/@fruitdaddy/is-this-the-end-of-air-drops

Using airdrops or even the sale of a token before you have actual utility of that token is a red flag, and will likely get you one of those new subpoenas the SEC seems to be handing out. I suggest you talk to your lawyer before you do an airdrop, and review the marketing materials and promotions to make sure you are covered.

[Vit83]

Sec will come after almost all ICO if they will want:) only ICO I know that pass test is UTT:) airdrop now is usually scum or cost nothing I would stop worry about sec in airdrops:)

[cryptonized]

I recently found one project called Ethereum Meta, it is related to anonymity and untraceable transaction. They have a very interesting project to build the Anonymous E-Market Place.

I already joined their AIRDROP !

They are on Pre-ICO stage right now, you can check their website: https://ethermeta.com/
Or even better go through their Bitcointalk thread and find more info on AIRDROP: https://bitcointalk.org/index.php?topic=2659058.0

http://ethermeta.com/img/logo128.png

[siddartha1492]

If only we didn't have so many scammy ICOs. That's what has made SEC go mad. To some extent SEC is also right. As an official organization, you can't just let people get deceived again and again and scammers laughing all the way through it.
 
But SEC or basically any equivalent organization in any country, needs to be more clear regarding their terms and shouldn't create unnecessary obstacles. I am witnessing many legit projects getting a hit due to these new rules. A proper balance is needed from both the sides.

[liutiaoming1]

It seems like they want to provide a MEL/KYC process mandatory for every kind of activity here, Bounties, ICOs (most of them are already that way), even airdrops will require KYC.

[terrenceschroeder]

Thank god they did not go for non-ICO projects. It deems that ICOs involved more scams nowadays. I am investing a lot in one called DeepOnion. It paid off me big time. Lucky me, I guess.

[HumberGuns]

I don't know what SEC can do against Airdrops... but airdrop are considered mostly as a gift though they require certain task to be done in order to receive the airdrop... SEC could define this tasks work and regulate it consequently... this is something really strange anyway! I don't know how SEC could react against Airdrops... it's difficult to say since I'm not a US citizen and I don't know labour US rules and SEC rules.
 

[izay]

Those existing ICOs mostly have scam record, this is why SEC enters. Some airdrops requires KYC before getting the reward. Seems good but on the other hand seems not.