Early-stage Token Investments: Careful Drafting Needed To Avoid Disputes

Partner Chris Duncan and counsel Tim Baildam discuss the importance of crypto companies and projects carefully drafting token related agreements with the legal advice of those with expertise in digital assets.

Start-up crypto companies frequently look to raise early stage capital by offering investors the right to receive tokens that will be issued by the company in the future. The point at which tokens are issued following the successful development of the relevant technology, the manner of delivery, and any lock-up restrictions, can be an area of uncertainty, particularly if the agreements are not carefully drafted with input from advisors familiar with tokens and crypto related transactions. Increasingly, we are seeing questions raised and potential disputes brewing concerning these issues involving crypto companies incorporated in offshore jurisdictions such as the Cayman Islands or British Virgin Islands, a trend we expect to continue as these types of