Are Airdrops Security Transactions?

Vicki Joseph

Contributor
Here we go again. Companies issuing tokens are trying any way they can to circumvent securities laws. The new and fashionable way to run an ICO is to sell the tokens to a small group of whales ($1M or more in crypto assets) in a private sale without any disclosures to the public and then airdrop a boat load of tokens later to anyone who signs up to a Telegram group.

The real goal of the airdrop is to create a large group of token holders to better facilitate listing on exchanges and create more liquidity. Exchanges love that and are more likely to list a token held by 10,000 people than by 100 investors.

There is even a new website to aggregate all of the airdrops. The party is just getting started. Millions of crypto investors are going to get millions of free tokens just for signing up to a website and becoming a proud member of a new group they actually do not necessarily care about.

Get details at- https://hackernoon.com/are-airdrops-security-transactions-7cfc55e64a15
Join us on telegram here for more- https://t.me/mosaicnetwork
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The CC Forums

Admin
Staff member
The real goal of the airdrop is to create a large group of token holders to better facilitate listing on exchanges and create more liquidity. Exchanges love that and are more likely to list a token held by 10,000 people than by 100 investors.

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Exchanges are swimming in money these days. Huge fees charged to get a token listed. Massive volumes of trades with fees. New investors moving in all the time. It’s the hottest quiet way to make a killing in crypto. Too bad licensing and regulation compliance are too stiff for smaller startups to safely navigate.
 

Old Man Crypto

Expert chainblocker
Paying taxes on unwanted airdrops is a problem for me. They just show up in ether wallets without permission, and I've read on other sites that they should be reported for taxes as dividends on the date received. Even if you don't sell them or use them.

Some people don't even know they got them, but taxes are due anyway? It just doesn't seem right to me.
 

The CC Forums

Admin
Staff member
Paying taxes on unwanted airdrops is a problem for me. They just show up in ether wallets without permission, and I've read on other sites that they should be reported for taxes as dividends on the date received. Even if you don't sell them or use them.

Some people don't even know they got them, but taxes are due anyway? It just doesn't seem right to me.

Yes. It would seem that there should be some way to reject or refuse to claim these. Tax treatment of network forks is confusing enough. The last thing we need is to report transactions we didn’t initiate or even want.

But the good news is that most involuntary Airdrops only have at most a few dollars in value. Several of mine are actually worth less than a dollar. I doubt there would be any significant penalty for “forgetting” or ignoring those. Especially since they would only be trackable if you declared them or revealed them somehow.

Maybe they can be treated as gifts. I’ll look into that the next time I research tax topics.
 

CoinSwitch_co

Contributor
You can track all online and upcoming airdrops from CoinSwitch’s airdrop platform. It has a list of airdrops with all the tasks in a very precise way, needed to complete to receive the airdrop. Visit: airdrop[dot] coinswitch [dot] co
 

BitFit

Contributor
Some issuers I hadn’t thought about. Does everyone who owns Ethereum get these Airdrops automatically? How about if I have Ethereum in an exchange account?
 

CoinSwitch_co

Contributor
Some issuers I hadn’t thought about. Does everyone who owns Ethereum get these Airdrops automatically? How about if I have Ethereum in an exchange account?
Air drop can be closely related to free gifts or rewards someone receives from the miners of a particular cryptocurrency in return when they hodl (hold) that particular type of currency over a period of time. Again, the currency received via airdrop could be the same currency that one might be holding or a currency which has come up due to fork in the existing cryptocurrency.
This depends on the miners of that particular currency.

Again, there could be air drops of newly launched coins as well. For example, a particular type of coin had to offer 1000 coins during its ICO which it gave to contributors in return of certain number of Ethereum.
 

CryptoTC

Crypto Fat Cat
The problem with airdrops is the taxation as mentioned above. Unless the IRS makes a statement clarifying, they are likely treated as income valued at the time issued. Many people don’t even know they have them, or don’t know they have to report them.

Then again, if the individual doesn’t know about them, probably neither does the IRS. :cool:
 

The CC Forums

Admin
Staff member
The problem with airdrops is the taxation as mentioned above. Unless the IRS makes a statement clarifying, they are likely treated as income valued at the time issued. Many people don’t even know they have them, or don’t know they have to report them.

Then again, if the individual doesn’t know about them, probably neither does the IRS. :cool:

And the amounts are usually tiny. Usually less than a dollar but OMG sent more than that to each ETH address IIRC.
 

Emma Lee

Contributor
Exchanges are swimming in money these days. Huge fees charged to get a token listed. Massive volumes of trades with fees. New investors moving in all the time. It’s the hottest quiet way to make a killing in crypto. Too bad licensing and regulation compliance are too stiff for smaller startups to safely navigate.

Anytime a company is offering securities to investors and some consideration is offered, it is considered a transaction
 
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