Bitcoin lawyer Adam Tracy explains what are Initial Mining Offerings, the use and purpose of Initial Mining Offerings and the legal and compliance issues concerning Initial Mining Offerings.
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A former competitive rugby player, serial entrepreneur, trader and attorney, Adam S. Tracy offers over 15 years of progressive legal and compliance experience in the areas of corporate, commodities, cryptocurrency, litigation, payments and securities law. Adam’s transactional experience ranges from initial public offerings, mergers and acquisitions to initial coin offerings, representing the pure startup to NASDAQ-listed entities. As an early Bitcoin adapter, Adam Tracy has been deeply involved in the growth of cryptocurrency and offers a unique, proprietary approach to representing crypto-clients. Adam resides in Chicago, IL with his six dogs/cats, which he is fairly certain is illegal in the town in which he lives.
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Video transcript:
So, we’ve had the, obviously, the ICO and then we had the IFO, the Initial Fork Offering, which I think are nonsense, which I’ve talked about before. And now, we have the IMO, which is not in my opinion, but rather the Initial Mining Offering. And it’s a unique con-,… I actually give the guy credit, whoever came up with it. But the concept is that you raise funds through investors by selling the mining equipment, right, or some pro rata interest in the mining equipment, and undoubtedly add some premium to what the mining equipment would otherwise cost. And then there’s some pooled agreement by the promoters to run the mining, the mining operation, right, with these machines, and then the funds or the crypto would be distributed back to a person. Well, it’s interesting because the question is again, you know, is it or is it not an offering of securities? And I think, to some degree, it isn’t. I think if structured properly, what you’re basically, you know, providing somebody is like a resale of mining equipment and with some pro rata, you know, back-end service contractor agreement, right?
The manner in which you pay out in an Initial Mining Offering is important because I think if you look at how mining works, right, and how pro rata works where you have sort of the hockey stick, if you aren’t paying back pro rata based on the, like, really, the hash rate that each person is buying into, then it starts to look like a pooled investment, right, like a unit investment trust or something like that. And, you know, securities can take all sorts of forms, right? Just because you’re technically buying, you know, a machine like a mining rig, it doesn’t necessarily mean that you are, right, from like a regulatory perspective, you know, operationally, it can be looked through, right? They can look to the actual intent as opposed to the actual substance which on paper may be, “Hey, you know, buy this mining rig and we will run it for you and then we’ll just distribute the proceeds.”
Read the remainder here: https://bitcoin-lawyer.org/crypto_videos/initial-mining-offerings-explained/
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