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Can I raise money through an initial coin offering (ICO) without violating securities laws in Alabama? What are the requirements?
Requirements for Raising Money through ICOs in Alabama
If you are planning to raise money through an initial coin offering (ICO) in Alabama, you must comply with the state’s securities laws. The Alabama Securities Commission’s mission is to protect investors from securities fraud and preserve legitimate capital markets [2].
Under Alabama law, a security is defined as any investment in a common enterprise with the expectation of profits derived solely from the efforts of others [2]. Therefore, if your ICO involves the sale of securities, you must register the offering with the Alabama Securities Commission or qualify for an exemption from registration [2].
The SEC has also been cracking down on fraudulent ICOs that violate federal securities laws. The SEC has filed enforcement actions against several companies for conducting fraudulent ICOs of unregistered digital asset securities [1].
To ensure compliance with both state and federal securities laws, it is recommended that you consult with a securities attorney before conducting an ICO in Alabama.
In summary, you cannot raise money through an ICO in Alabama without complying with the state’s securities laws. If your ICO involves the sale of securities, you must register the offering with the Alabama Securities Commission or qualify for an exemption from registration. It is recommended that you consult with a securities attorney to ensure compliance with both state and federal securities laws.
Source(s):
Jurisdiction
Alabama