The Best Non-Legal Advice I Can Give to ICOs* to Avoid Getting Sued

The Best Non-Legal Advice I Can Give to ICOs* to Avoid Getting Sued

Grant Gulovsen, of the cryptocurrency law firm Gulovsen Law Office, offers practical, non-legal advice insight into what ICOs* can do to avoid getting sued.

*For the benefit of any blockchain/crypto grammar nazis out there, please note that when I use the term “ICO,” I am referring to “an individual, company or association which utilizes a non-security token sale to raise funds for operational expenses, lambos, etc.” Mmkay? Are we clear on that? Super!

Prior to starting my own law firm back in 2014, I worked for ten years as an associate and then as a partner at a commercial and civil litigation firm, representing both plaintiffs (the ones doing the suing) and defendants (the ones getting sued). After a while, I started noticing that in nearly every case, regardless of the subject matter or cause of action, it was always the same event that finally caused the plaintiff to call a lawyer.

Non-legal advice insight into what ICOs* can do to avoid getting sued

The Same Event

Although my focus is less on litigation these days, I’ve started getting more calls from people asking what options are available to recover the funds they lost by investing in ICOs and other crypto-related ventures. And sure enough, the event that finally led them to call me was exactly the same as the one that caused plaintiffs to call my old firm. That “event” is a breakdown in communication.

It’s an Easy Fix

The amazing thing is that it is such an easy fix, and yet for whatever reason, it keeps happening. So here, dear reader, is the best non-legal** advice I can give to ICOs to help them avoid getting sued:

**When I say “non-legal” advice I really mean non-legal advice. Not the sort of non-legal advice that some attorneys (and even non-attorneys) provide on their website or blog that is without question legal advice. But because they really shouldn’t be giving unsolicited legal advice to the general public, they simply call it non-legal advice. As if that’s actually going to stop someone from relying on it as legal advice.

Talk to your community.

For too many projects, the community is seen as a means to an end – it exists solely to help the project fundraise and get its tokens listed on an exchange and once those objectives are achieved, the community no longer has value and can be abandoned. Although some commentators have suggested that the importance of community is overrated, if you want to keep your backside out of the chair reserved for defendants in civil court, you’d better think twice before abandoning them.

Talk to your community.

One of the funny things about communities is that they can be rabidly loyal, even when not being treated with the respect they deserve. The reason I feel so many of these communities deserve more respect is because if you look back at the last 12-18 months of token sales, nearly every successful retail token sale owed its success far more to hype (i.e., the work of the community and community management teams) than to the skill or vision of the founding team. There may be a few exceptions here and there, but let’s be honest – very few. The communities deserve a lot more respect.

Please don’t treat your community the way the world used to treat Rodney Dangerfield…
Please don’t treat your community the way the world used to treat Rodney Dangerfield…

Talk to your community.

The other funny thing about communities is that when their rabid loyalty does finally come to an end, if they feel like they’ve been used and disrespected, that rabid loyalty can quickly turn into the other kind of rabid – the bad kind – the kind that, despite being against everything they believe in, finally contacts an attorney (such as myself) to inquire about possible legal action against the team that let them down, because the team had stopped communicating with them and left them no other choice.

Talk to your community.

I totally accept the fact that nobody really likes lawyers very much, but few groups seem as eager to rid the world of them as do fans of cryptocurrency and decentralization.*** Which means you really have to piss these people off to get them to call someone like me looking for help. And if you are the founder of an ICO, the best way to accomplish that is to ignore them.

***In addition to being an unfair overgeneralization (as most stereotypes typically are), thanks to the following article posted by Vlad Zamfir literally hours after this post was published, it may end up being wrong: Against Szabo’s Law, For A New Crypto Legal System

If you don’t give a person a reason to talk to a lawyer, they won’t do it. And if you don’t want one of your community members to give YOU a reason to talk to a lawyer****, I encourage you to assess the state of your project’s community and if it is in decline, take the time and spend the money necessary to get it back in shape. And most important of all, just talk to them. In many cases, all they need is some assurance that you’re still there and listening. It is hands down the most cost-effective insurance you can buy and far cheaper than having to pay someone like me to defend you.

****That said, if you do need to talk to a lawyer about this or any other topic related to cryptocurrency, you are welcome to contact my office at any time.

Grant Gulovsen is the principal at Gulovsen Law Office, a law firm providing cryptocurrency-related legal services including intellectual property, securities, employment, and litigation. He currently resides in Galesburg, Illinois, with his wife, daughter and one too many cats.

Editor’s note: This article was written by Grant Gulovsen and re-published with permission from Gulovsen Law Office.

Images courtesy of Shutterstock, Frankenstein (1931)/Universal Pictures, Arista Records


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