HOW DO YOU SELL YOUR RESTRICTED REG D ICO TOKENS? (RULE 144)

  • You have to lock them up for a year, and
  • Wait for the company to remove the restrictive legend, and
  • Follow Rule 144,
  1. Hodling Period: You have to hold them for 6 months if the issuing company is a “reporting company” (not the case for ICOs) or 1 year (bingo for ICOs). This one-year lock-up clock starts the minute that you pay money (or eth) for the ICO Tokens. If someone gifted you their ICO Tokens, the 1-year dates back to the original purchaser’s purchase date. For Advisors working for deferred token compensation, this clock would likely start the moment the Tokens are issued for sale to the public.
  2. Public Information: Enough information about the issuing company must be publicly available before the sale, such as: (1) the nature of the business, (2) the identity of the officers, and directors, and (3) the ICO issuer ‘s financial statements with an accountant’s seal of approval.
  3. Trading Volume: You can’t dump your tokens all at once and crash the market. An affiliate can only sell the greater of: (a) 1% of the overall tokens; or (b) the average weekly trading volume during the four weeks leading up to the filing of a “Notice of Sale” through Form 144.
  4. Ordinary Brokerage Transactions: If you are an affiliate, you have to sell through a registered broker-dealer — and you can expect to pay 2.5–5% in commissions. (Damn it must be nice to be a broker-dealer!) Neither the seller nor the broker can solicit orders to buy the securities unless they meet specific conditions laid out in Rule 144A. This section of the rule allows qualified institutional buyers (QIBs) to trade private securities among themselves. This doesn’t exist yet in Crypto — but I would optimistically imagine it means any ICO Accredited Investors can trade amongst each other because it creates positive liquidity in the market and the sophisticated (aka rich) AI’s are not the mom and pops general public the SEC is concerned about.
  5. Filing Notice of Proposed Sale with the SEC: If you are an affiliate who plans to sell more than 5,000 shares (doubtful this limit would apply to Tokens), or $50,000 USD worth of the Tokens in any 3-month period, you have to file a notice with the SEC.

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Sasha Hodder

Sasha Hodder

Crypto Attorney; Former Trader; Host of the Hodlcast Podcast; Freedom Enthusiast; www.sashahodler.com; @sashahodler