• Case Study
A Canadian Initial Coin
Offering Instantly Verifies
Global Investors
Deliver an ICO
That Withstands
Regulatory
Scrutiny
Trulioo — Case Study
The
Challenge
The world of blockchain and
cryptocurrency technology is a new
frontier. Like any financial frontier,
it is rich with opportunity, peppered
with risk, and somewhat fluid with
how it is regulated.
As regulations continue to mature, blockchain operators
are looking to grow their business while keeping abreast
of new regulations to ensure compliance. The Initial
Coin Offering (ICO) is one patch of territory where
the mystery, opportunity and regulatory demands of
the business combine. Similar in concept to the more
commonly known Initial Public Offering (IPO) where a
company issues shares for the public and investors to
purchase, an ICO serves as a fundraising mechanism,
potentially leading to future trade on a token or crypto
exchange. ICOs are quickly becoming a popular topic
of discussion for regulators, investors and crypto-
enthusiasts around the world, and performing Customer
Due Diligence is a necessary step in helping the ICO
comply with existing regulations. This fintech company
recognized the sophisticated complexity of compliance
and chose Trulioo to help them with their ICO.
Due to its relatively recent foray into society, ICOs
pose a unique set of challenges for investors
and regulators alike. Many people view ICOs as
unregulated securities or entities that allow founders to
raise a large amount of capital; others argue that ICOs
are an innovative take on the traditional venture capital
fundraising model. Often, there are restrictions around
who can participate in an ICO. For example, many
ICOs don’t allow residents from the United States to
invest due to the Securities & Exchange Commission’s
(SEC) efforts to regulate cryptocurrencies as
securities. Some ICOs only allow sophisticated
investors — people deemed knowledgeable enough
to deal with high-risk investments — to participate in
the funding.
Regulating an Emerging Fundraising Platform
ICOs are difficult to structure. Many continue to
exist in somewhat of a gray area due to confusion
around regulation and policy. Setting up an ICO
requires a heightened level of due diligence to
ensure it is completely compliant. The repercussions
for non-compliance include fines to jail time, not
to mention being associated with the “pump and
dump” scams that have made headlines and sullied
many reputations. No matter where you launch an
ICO, entrepreneurs need to be aware of a raft of
securities laws. Because ICOs can raise funds from
nearly anywhere in the world, these laws are not
only of concern in the ICO’s home country, but also
overseas — particularly in the United States. The U.S.
market represents one of the largest capital pools
with many investors keen to partake. One vital factor
is that investors must be verified and checked against
sanctions and watchlists to ensure that criminals,
terrorists and other bad actors are prevented from
participating in ICOs.
Trulioo — Case Study
How Trulioo Helps ICOs Remain Compliant With
Identity Verification
Trulioo is providing identity verification services to a
growing number of ICOs, helping to ensure they are
fully compliant with the various securities rules and
regulatory requirements. Doing this helps to reduce
the risks associated with the non-compliance of Anti-
Money Laundering (AML) and Know Your Customer
(KYC) laws.
One such example is one of the first ICOs to launch
in Canada. Offering a unique investment opportunity,
the company’s coin works alongside the traditional
economy, but keeps public benefit top of mind.
Working closely with this ICO to ensure it met
necessary province-specific securities laws, Trulioo
was able to help it become one of the first to be
completely compliant with all Canadian regulations.
Getting there wasn’t easy. This ICO had to meet a wide
range of regulations outlined by its local regulator. It
was effectively operating in unchartered territory,
which added an additional layer of complexity to the
nature of its identity verification requirements. It could
not afford to get it wrong — it was truly a make or
break situation.
To ensure its coin met all the necessary regulations, it
needed to work with an identity verification provider
with the ability to provide secure access to reliable,
independent, trusted data sources.
As an agile fintech company, it was imperative
that the ICO partnered with a trusted identity
verification provider that had extensive experience
helping businesses meet international compliance
requirements across borders quickly, reliably and
efficiently. After carefully evaluating various solutions,
the company chose Trulioo for its speed, coverage,
cost, scalability and easy integration.
The
Solution
60
With Trulioo, one ICO was able to
quickly integrate and access data from
over 60 countries, verifying more than
2,500 investors in real-time.
The world’s
identity
platform.
Contact Us
Trulioo is a registered trademark of Trulioo Information Services Inc. in the United States, the European Union,
Canada and other countries.
Trulioo is the world’s identity platform, trusted
by leading companies for their verification
needs. The Trulioo integrated, automated
platform provides unparalleled global coverage
for business and person verification and a
comprehensive suite of in-house capabilities.
Combining its state-of-the-art technology with expert verification
knowledge across diverse markets, Trulioo enables the highest
verification assurance levels, optimizing onboarding costs and
fostering trust and security in the global digital economy.
The Results
Seamless Onboarding, High Levels of Trust and a
Successful ICO
With Trulioo, this ICO was able to quickly integrate and
access data from over 60 countries, verifying more
than 2,500 investors in real-time so it could purchase
tokens at the time of launch. To add an additional layer
of security and speed to its identity authentication
process, the ICO also leveraged the Trulioo Identity
Document Verification service to overcome the hurdles
other ICOs and exchanges experienced with manual
verifications. ICOs and exchanges that manually verified
investors oftentimes resulted in pausing token sales and
temporarily ceasing operations, which took weeks and
even months in some cases.
Using Trulioo technology, it was able to meet the
necessary compliance standards with ease while
also providing a seamless customer onboarding
experience — two extremely important factors for any
business. Because it was striving to be fully compliant,
it was critical the ICO chose a provider that it was
100 percent confident with and that had substantial
experience and expertise working with clients in
regulated industries. The company issued nearly two
million coins, allowing purchasers to buy products and
services from accredited companies, complete peer-to-
peer payments, and earn interest by supporting impact
entrepreneurs through microlending, crowdlending
and P2P lending relationships.
This ICO, along with many other businesses and
services, was facing the challenge of becoming
regulatory compliant and turned to Trulioo for its
digital identity verification and identity document
authentication needs. As a result, it ensured a higher
degree of protection for not only its participants, but its
investors too, establishing a high degree of trust in its
product and company.
About ICOs
Tied to the fascinating worlds of blockchain
and cryptocurrency technology, an ICO is a
fundraising mechanism in which new projects
sell payment, utility or security tokens, which
later become tradable on an exchange.
The Swiss Financial Market Supervisory
Authority (FINMA) describes payment tokens
as being synonymous with cryptocurrencies,
while utility tokens are used to provide access
to an application or service and security or
asset tokens are similar to equities, bonds or
derivatives.