Attorney Adam S. Tracy is a founder of The Tracy Firm, Ltd. and is focused exclusively on representing aggrieved investors and cryptocurrency users worldwide who seek to recover their financial losses.
Showing posts with label Adam S Tracy Bitcoin Lawyer. Show all posts
Showing posts with label Adam S Tracy Bitcoin Lawyer. Show all posts
Crypto Cannabis attorney Adam S. Tracy explains the current legal landscape regarding the cannabis industry and the uses and applications of cryptocurrency within the cannabis industry.
A former competitive rugby player, serial entrepreneur and, trader attorney, Adam S. Tracy offers over 17 years of progressive legal and compliance experience in the areas of corporate, commodities, cryptocurrency, litigation, payments and securities law. Adam's experience ranges from commodities trader for oil giant BP, initial public offerings, M&A, to initial coin offerings, having represented both startups to NASDAQ-listed entities. As an early Bitcoin adapter, Adam has promoted growth of cryptocurrency and offers a unique approach to representing crypto-clients. Based in Chicago, IL, Adam graduated from the University of Notre Dame with dual degrees in Finance and Computer Applications and would later obtain his J.D. and M.B.A. from DePaul University. Adam lives outside Chicago with his six animals, which is illegal where he lives.
Cryptocurrency and hedge fund attorney Adam S. Tracy discusses the pros and cons of locating of your cryptocurrency fund or initial coin offering company in the British Virgin Islands.
So I’ve chatted about Belize, and Cook Islands, Cayman Islands, Estonia and the like, and I want to add one to the list. That’s the BVI’s (British Virgin Islands) as a possible crypto destination. And I’ve gotten increasingly frustrated with the Estonia, Switzerland crowd and like, I’ve talked about it before, and now Gibraltar adds to that list. What I don’t get is if you’re planning an ICO or something like that, and you’re looking for a friendly jurisdiction, why do you go to a jurisdiction that already has regulation that would inure or relate to your ICO that you’re going to be doing outside the country, right? You’re not going to domicile in Gibraltar for your ICO, so you can cater to and offer your ICO to like the 20,000 odd people who live in Gibraltar, right? That doesn’t make any sense. Same with Estonia, and to a lesser extent Switzerland. They’re small countries. You just won’t do it. Especially considering most ICOs, you’re just trying to attract US investors and the like. So it doesn’t make any sense why people want to flock to where there’s regulation, when there’s no regulation to be had somewhere else.
So I like the term crypto agnostic, right? I think that’s the best way to sort of evaluate jurisdictions, when you talk about the friendliness to cryptocurrency because the absence of regulation is probably the best thing that you’re going to get. And so the BVI’s is increasingly better only because they’ve yet to do anything that suggests that they’re going to regulate iCOs, whereas you see some activity within the Cayman Islands and other places where they want to regulate that and they want to regulate ICO’s that are domicile or rising from their borders, even though you may not be offering it to the the people of that jurisdiction. So it allows you this sort of extra jurisdictional bent, but now that’s being shut down when countries want to jump on the bandwagon of regulating crypto and ICOs that they don’t clearly understand.
So I like to BVI’s for a few reasons. Obviously, no tax – crypto agnostic – they have no crypto regulation. Just simply form an offshore corporation with the intent to offer the ICO outside of the BVI’s, which obviously you would. There’s no capital requirements. Switzerland’s very big with that, where you have to provide financial statements with your corporations – you have to have a certain requisite capital to form companies in certain instances, and you have to show a certain amount of net capital in certain instances. None of that’s worth it. Showing 50,000 marks on your books is not worth it, that does not make any sense. But the BVI’s provides, you know, really provides all of that. And I think what differentiates BVI’s versus a Belize or Nevis, which I’m a huge proponent of Nevis (and I think I’ve been one of the leading proponents of Nevis), but the BVI’s has got an optic bent that none of the other crypto friendly jurisdictions that I’ve talked about before it really have, right? Estonia may, Switzerland may, but the BVI’s – the optics are good. If you look at BVI’s, it’s the number one offshore incorporation definition by volume, right? And then you also look at the number of legitimate large traditional hedge funds, which are based there, there’s quite a few. Between Cayman Islands, that’s 90 some odd percent of the world’s hedge funds that are domicile in one or two locations.
So you have this optic bent, which I get the question more and more, and it’s like well, you know, will the optics be right? Will the optics be right if I want to approach high net worth? Would the Optics be right if I want to approach institutions? And I think that’s a pretty easy sell to say that the optics are correct with BVI’s, because it’s sort of an accepted offshore jurisdiction, whereas Nevis and Belize, while ideal and they suit the needs of crypto investors because that’s just the nature of crypto, you know, your more traditional investor may not find BVI’s to be so piratey for lack of a better word. So, for the tax reasons, the lack of regulation, the crypto agnosticism (as I like to call it), as well as very affordable in corporation fees (about twice that at Nevis), and no capital requirements, and then obviously privacy. Right? Obviously privacy is a huge thing in crypto, and you do have some fairly strict (privacy in the BVI’s), not as well as – not as good and strong as Belize and In Cook Islands, but you can incorporate something and understand with a fair degree of certainty that it’ll be a private corporation – a private transaction.
So that’s my taking on the BVI’s. it’s coming up. That can obviously change. I can’t see anything or haven’t been able to research anything that would indicate that they are attempting to regulate crypto. I think there was some ground swell of support to sort of not regulate it, which again, the absence of regulation is what you obviously would be looking for. It’s not running to places like Estonia and Gibraltar that passed laws, right? That doesn’t quite make a great deal of sense to me, but people will undoubtedly disagree. So feel free to comment. Feel free to comment below as you do. So. Hey, check me out – TracyFirm.com.
A former competitive rugby player, serial entrepreneur and, trader attorney, Adam S. Tracy offers over 17 years of progressive legal and compliance experience in the areas of corporate, commodities, cryptocurrency, litigation, payments and securities law. Adam’s experience ranges from commodities trader for oil giant BP, initial public offerings, M&A, to initial coin offerings, having represented both startups to NASDAQ-listed entities. As an early Bitcoin adapter, Adam has promoted growth of cryptocurrency and offers a unique approach to representing crypto-clients. Based in Chicago, IL, Adam graduated from the University of Notre Dame with dual degrees in Finance and Computer Applications and would later obtain his J.D. and M.B.A. from DePaul University. Adam lives outside Chicago with his six animals, which is illegal where he lives.
Cryptocurrency hedge fund formation attorney Adam S. Tracy explains fee structures for bitcoin and cryptocurrency based hedge funds and investment funds.
The hedge fund. What do I charge people right I get all the time. What do I charge people? What do I charge? Well traditional hedge funds? Okay, traditional heads hedge funds which are 1 to 2% as a management fee and then 20% as what’s called an incentive allocation. Okay, let’s talk about the management fee management fee is a fee that’s intended to cover the manager of the fund managers overhead.
So like salaries rent whatever overhead and typically in a traditional context wanted to percent is that monthly fee and how it works as one of two ways. It’s Plated in paid in advance of the month, right or it’s paid one month in arrears meaning it’s 1% So if you had $100,000 assets under management, you take 1/12 of 1% times 100,000 and that would either be paid at the front end of the month or one month in a rear is at the beginning of that month, right? And again, it’s meant for to cover overhead. It’s not meant to be sort of a profit Center. So 1 to 2% is always been been the norm now startup hedge funds are well advised to keep that lower.
Okay in the sense that it presents a barrier to entry to somebody wants to invest in your phone. Okay, so you don’t want to come at people with you know, a 3/4 percent because it doesn’t necessarily give them a reason to invest or get into your fun. Especially in the early stages. Now, the incentive allocation is a little bit different because it’s performance-based, right? Okay, and so Typically, its twenty percent of the profit that that fund earns. Um, and that’s pretty standard now in the crypto space because of one liquidity issues to because it’s a very nuanced and sort of specific area. Right I’ve seen a lot of funds do well charging 3035 percent, right and that’s high but given the Alternatives it’s really your only chance for exposure.
Right so you can justify it in certain certain contacts, but you know as an investor, I would look to see what what that fund is actually doing right? I mean, what are they doing? Are they just pimping icos or are they you know, they have some algorithmic or quantitative trading strategy that has a proven track record and you could substantiate, you know, parting with 35 percent of the profit that you otherwise would be entitled to as a limited. Hedge fund okay.
So from you know my vantage point as one who sets up hedge funds. Okay. I think you start, you know initially, especially when you consider the limitations of a start-up hedge fund, right, you know, the 3 C1 exemption of the Investment Company act limits you to 100 accredited investors. So you’re only going to get to a certain level and you can only take that incentive allocation from accredited investors, so they have to be in credited. Well, you know, I would be wary of taking fees that that sort of vary from the norm right an accredited investor may have exposure to traditional product hedge funds and may be accustomed to in 20% I wouldn’t fear drastically from that, uh, mainly because you’re competing with the ecosphere of of you know, hedge funds Financial products whether it’s debt Equity swaps options, You name it and you’re not and you’re also competing with the varied strategies, you know, high-frequency long short, whatever the case may be.
So you have to consider that right when you’re starting a fondant when you’re investing in a van. You also have to consider that so my I guess my message is sort of coming from not only for spective of an attorney who’s you know, advising you on on how to maybe set up a fund but also as an investor or maybe you’re a fund to funds right and then this is sort of relevant on both ends. But um generally speaking I like to keep the management fees low in the incentive allocation higher right especially because the performance-based aspect of it in numerous to more investor confidence and it’s a lower presents lower barrier to entry so, you know, the question is what do I try to people?
Well you can charge them whenever you want in theory, right as long as it’s properly disclosed in your offering memorandum, and it’s a properly accounted for In theory, you could charge whatever you want.
But again your marketing, right? This goes back down to marketing and there’s limited funds out there and you know people want exposure to crypto. So maybe they’re willing to pay a little bit more on that incentive allocation. But I keep the management fees low. That’s my advice. I would say don’t Veer from the norm and you know, go to three four percent just because you have an illiquid asset writing crypto. I don’t think that or you have higher transaction fees versus Equity. I don’t think that makes sense. I think what you have to do is overcome the barriers to entry which is that that fee right and I’m an investor saying well, I’m going to put in $100,000 but four percent of it goes out the door right away and the first year right just to you know, pay your salary.
I think that the Optics are poor. So I think keep that more in line with what your additional funds are to try to bring money into your fund and then increase it may be on the incentive allocation side because you have specialized knowledge if you are in fact running like a High frequency quantitative trading hedge fund that’s based on cryptocurrency. Then you have a skill that very few people do in fact have so um, you know, the answer to the question in the link very very brief answers really whatever you want to charge but I’d be very cautious and you know concerned about the Optics of it and your ability to raise invest your funds given, you know, that that management fee expecially so hit me up. Uh, I’m on uh, well, I’m on everything I guess but how about telegram at Adam underscore Tracy know, uh, follow me?
A former competitive rugby player, serial entrepreneur and, trader attorney, Adam S. Tracy offers over 17 years of progressive legal and compliance experience in the areas of corporate, commodities, cryptocurrency, litigation, payments and securities law. Adam’s experience ranges from commodities trader for oil giant BP, initial public offerings, M&A, to initial coin offerings, having represented both startups to NASDAQ-listed entities. As an early Bitcoin adapter, Adam has promoted growth of cryptocurrency and offers a unique approach to representing crypto-clients. Based in Chicago, IL, Adam graduated from the University of Notre Dame with dual degrees in Finance and Computer Applications and would later obtain his J.D. and M.B.A. from DePaul University. Adam lives outside Chicago with his six animals, which is illegal where he lives.
Cryptocurrency attorney Adam S. Tracy revisits the Simple Agreement for Future Tokens and FINRA’s recent guidance on the SAFT.
So I’ve talked about this SAFT before, and my problem with the SAFT has always been that it assumes that the token you’re selling is a security, but later it’s going to somehow not become a security and that there’s no real legal or factual basis for that happening anywhere in finance, right?
There’s situations were securities become commodities and commodities become securities, but I can’t find anything nor do I believe anybody’s found anything where you have something that is a security and then ceases to be a security. And, Finra last week actually came out and said something to that effect, which basically threw water on the whole concept of the SAFT. And so I caution against using it because again, I think it’s predicated upon an untested legal theory. And that’s what Finra said.
Finra said there’s no guarantee that the SEC or any court would actually agree with the the concept, if you will, that the SAFT holds, that you have a token that you’re selling – a token or a coin that you’re selling – that token or coin is a security for purposes of this ICO, but later down the road it wouldn’t be and that somehow would give you liquidity. Right? And that’s what I believe to be legal fallacy. So I think there’s good parts in the SAFT. I think, you know, it’s generally well written but I think, you know, (and I’ll talk about this in a subsequent video), I think what needs to be adopted is more of the license model, right?
And the license is a constant exception to the Howey Test and, you know, when you’re drafting your Your SAFT agreements, which really isn’t a good term, you have to redesign that, and take away that nomenclature – that language that contemplates this transformation from something that it is to something it is not, because it just simply doesn’t exist anywhere in securities or commodities law for that matter. So Finra looks like they’re right on point with what the SAFT agreement. I’ve always said that the SAFT agreement was really the byproduct of large law firms, and was created for purposes of giving VC and other venture back private equity access to angel rounds and seed rounds, where they get the lowest valuation because after all, they have the ability, right?
They have the cash flow, the working capital to sustain the illiquidity that you get in a VC model. And, you know, by labeling your initial coin offering, your initial token as a security, it’s going to be a restricted security, it’s not going to have that liquidity. Then, you know, it brings in sort of the bigger players and, you know, commits their or sort of guarantees their access to the best blockchain deals at the best valuation. So it’s a little bit of a conspiracy theory. I know. But, you know, that’s what I think about this SAFT, and it looks like Finra is actually agreeing with me for once. Who knew, right? So I’m Adam Tracy. Check me out – tracyfirm.com, and I’ll talk to you soon.
A former competitive rugby player, serial entrepreneur and, trader attorney, Adam S. Tracy offers over 17 years of progressive legal and compliance experience in the areas of corporate, commodities, cryptocurrency, litigation, payments and securities law. Adam’s experience ranges from commodities trader for oil giant BP, initial public offerings, M&A, to initial coin offerings, having represented both startups to NASDAQ-listed entities. As an early Bitcoin adapter, Adam has promoted growth of cryptocurrency and offers a unique approach to representing crypto-clients. Based in Chicago, IL, Adam graduated from the University of Notre Dame with dual degrees in Finance and Computer Applications and would later obtain his J.D. and M.B.A. from DePaul University. Adam lives outside Chicago with his six animals, which is illegal where he lives.
