Partner Ohoon Kwon provided legal counsel to a global blockchain company preparing to launch an innovative token reward program. As the project aimed to target users worldwide, the client faced the complex challenge of offering attractive incentives while complying with diverse and often conflicting financial regulations across jurisdictions.

At the heart of the project was a tiered reward structure that provided greater incentives when the token price declined. However, this approach risked violating sensitive legal areas such as securities regulations and anti-deposit-taking laws in various countries. Therefore, meticulously crafted legal safeguards were essential across key documents, including terms of service, reward program guides, and disclaimers, to minimize potential legal exposure.

Mr. Kwon began by conducting a detailed legal analysis of the client’s business model. He identified that the complex reward structure could potentially be interpreted in certain jurisdictions as an “unregistered securities offering” or a “guarantee of principal loss coverage.” He then proposed concrete alternatives, including a legally stable fixed-reward model and a conditional reward model that, while accepting some risk, came with a defensible legal rationale. He clearly outlined the pros and cons of each model and ultimately provided customized legal documents tailored to the chosen structure, ensuring compliance with disclosure and disclaimer obligations.

Thanks to Mr. Kwon’s advice, the client gained a clear understanding of previously unrecognized legal risks and was able to adopt a legally sound business model that proactively mitigated the possibility of regulatory sanctions. This strategic decision significantly enhanced the project’s credibility and laid the foundation for sustainable growth.