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Can I raise money through an initial coin offering (ICO) without violating securities laws in Illinois? What are the requirements?

Requirements for Raising Money through an ICO in Illinois

In Illinois, the Illinois Securities Law of 1953 regulates the offer and sale of securities, including digital assets such as cryptocurrencies and tokens offered through ICOs. The law requires that all securities offered or sold in Illinois be registered with the Illinois Secretary of State or qualify for an exemption from registration [1].

To determine whether an ICO offering is a security, the SEC applies the Howey test, which examines whether the offering involves an investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others [1]. If the ICO offering meets this definition, it is considered a security and must be registered with the SEC or qualify for an exemption from registration [1].

The SEC has taken enforcement actions against ICOs that violate securities laws, such as Telegram, which was ordered to return $1.2 billion to investors and pay an $18.5 million penalty for offering and selling unregistered securities [4].

Therefore, if you plan to raise money through an ICO in Illinois, you must ensure that your offering complies with the Illinois Securities Law and the SEC’s regulations. It is recommended that you consult with a securities lawyer to determine whether your ICO offering is a security and what exemptions from registration may be available to you [1].

Source(s):
Jurisdiction

Illinois