Ripple Chief Brad Garlinghouse is Keeping It Real on ICOs
Ripple's chief executive has some words of advice for issuers behind ICOs: do not spend all your funds in one location.
Brad Garlinghouse, who is at the helm of the blockchain startup that's supporting the XRP token, admonished ICO companies to «save some proceeds» in case they find themselves the target in a token-price fueled class-action complaint, according to remarks he made to CNBC. He also believes the legal community will emerge as the winners at the ICO boom.
«Entrepreneurs will need to be [going in with] eyes wide open… The winners will be the lawyers because they are going to help you issue the token and then they're going to help you defend it,» Garlinghouse is quoted as saying.
For Tezos, whose ICO controversy was well documented, the law firms defending the embattled startup are Los Angeles-based Baker Marquart as lead counsel along with Palo Alto, Calif.-based co-counsel Cooley LLP.
Part of the messy dispute involving the Tezos founders and the head of the Swiss Foundation involved legal penalties, together with the Breitman duo suggesting the foundation pay the lawyer fees for the complaints ICO participants lodged against them. In fact, those attorney fees would likely come out of the USD 232 million that the ICO raised from shareholders, adding insult to injury to cope participants.
Garlinghouse provided another piece of advice.
«Better sometimes to concentrate on solving real problems for real customers, and not worry about running infrastructure for a token issue, getting listed on exchanges and each of the steps that come with that.»
Garlinghouse made the remarks to CNBC from Singapore's Cash 20/20 event.
Utility Token vs. Security Token
ICOs will also be in the spotlight in Israel, where they just received more wind at their back. A committee dedicated to analyzing if token sales recommends «lenient regulation for ICOs on a limited scale,» according to a report that they submitted to the Israel Securities Authority, as mentioned in regional publication Globes. They also need to spur innovation by creating a «regulatory sandbox» dedicating to trialing ICOs and advising companies.
They are also calling for a clear distinction to be made between tokens that are designed as a safety and the ones that be a utility, which is a murky area that issuers and regulators wrestle with across many jurisdictions. Security token exhibits characteristics of ownership, membership or dividends as a utility token reflects utilization rights enclosing a project, the report determined.
If Israel implements these recommendations, we can see more issuers flock to the country to record their ICOs.