Latham & Watkins lawyers provide an in-depth look at recent issues impacting the use of token presale agreements.

By Stephen P. Wink, Miles P. Jennings, and Shaun Musuka

Token presale agreements are a popular type of financing instrument among startups in the blockchain space. In this article, originally published by Bloomberg Law, Latham & Watkins lawyers explore the initial impact of SEC v. Kik Interactive Inc. on the use of token presale agreements and discuss an approach Latham & Watkins developed to overcome challenges such as the “single plan of financing” issue. This approach, developed in collaboration with ConsenSys and OpenLaw, is encapsulated in the Automated Convertible Note, a free-to-use tool that addresses future token sales in a manner compliant with US securities and commodities regulations.