Case Study: Anonymized Token Sale Legal-Structural Implementation for a Protocol Launch Client

This case study documents the legal-structural implementation we executed for a protocol development client preparing a public token sale contemporaneous with mainnet launch.

The engagement objective was to construct a governance-credible and operationally separable architecture in which ecosystem stewardship, sale execution, and commercial development operations were isolated into distinct legal entities, with defined authority boundaries, traceable funds flows, and publication-grade disclosure outputs.

Step 1 — Define the system boundary and token functions. The project defines a public blockchain network and a native Token intended for validator staking within the consensus design, payment of network transaction fees, and participation in protocol change mechanics through validator delegation and client software adoption. The Token is treated as a network utility asset whose operative functions are limited to the protocol’s technical and economic design, with the sale timed near public network launch and delivery planned around launch.

Step 2 — Partition stewardship, sale execution, and commercial build work. The legal architecture separates long-lived stewardship and ecosystem spending from the token sale contracting party and from the employer that builds software. The steward entity holds treasury responsibilities, grants, delegations, and program spending; the seller entity signs the sale documentation and carries sale-specific contractual exposure; the builder entity employs staff, contracts vendors, and performs engineering work under a paid services mandate.

Step 3 — Constitute the steward entity as a memberless foundation company. The project forms FoundationCo as a memberless Cayman Islands foundation company and appoints a board that acts as the decision node for treasury policy, delegation programs, ecosystem incentives, and high-value contractual commitments. The internal rules describe approvals, signatories, conflicts, custody controls, and public communications channels, with the operating intent fixed on network development support, decentralization, security posture, adoption programs, education, and ecosystem outreach.

Step 4 — Constitute the seller entity as a controlled subsidiary. The project forms IssuerCo as a British Virgin Islands company, controlled by FoundationCo, and uses that subsidiary as the contracting counterparty for the exchange-run token sale portal. Control is expressed through corporate governance instruments and board resolutions that allocate signing authority for sale documentation, custody arrangements, and token delivery mechanics while reserving treasury-risk decisions to FoundationCo’s board.

Step 5 — Constitute the builder entity as a for-profit operating company. The project forms or maintains DevCo as a for-profit corporation that hires engineers and contractors, engages auditors and security vendors, and maintains the core client codebase. DevCo runs payroll and standard commercial operations, and it acts as the operational locus for software development, research, documentation, and tooling that support the network’s launch and ongoing maintenance.

Step 6 — Fix the intercompany services boundary in a development services agreement. FoundationCo and DevCo execute a written development services agreement that defines deliverables, milestones, acceptance criteria, payment terms, and termination rights, with compensation described as arm’s-length professional services fees. The agreement assigns responsibility for confidentiality, security controls, incident handling, and dependency management, and it states the IP path for new code contributions and contributor assignments, either into DevCo with a license to FoundationCo or directly into FoundationCo, with one path chosen and applied consistently.

Step 7 — Define treasury funding flows between builder and steward. The structure states how FoundationCo will obtain cash runway for staffing, vendors, and ecosystem programs, including a donation or grant from DevCo or another funding source that covers operating expenditures into a defined period. The funding instrument is documented with scope, permitted uses, reporting expectations, and board approval thresholds, and it remains distinct from any token sale proceeds, which follow sale-specific controls.

Step 8 — Specify token non-rights and the separation from equity. The Token terms state, in plain contractual language, that the Token does not represent equity, ownership, or profit-sharing rights in FoundationCo, DevCo, or any other organization, and it does not confer entitlement to protocol revenue. The structure treats equity in DevCo and the Token’s economic and functional profile as separate instruments with separate value drivers, and the disclosure package keeps that separation explicit and repeated wherever purchaser expectations could drift.

Step 9 — Fix the initial token supply map and release mechanics. The project allocates the initial supply across ecosystem development, team, investors, public sale, builder treasury, and community distributions, with an explicit distinction between tokens that are unlocked at launch and tokens that remain locked under time-based schedules. The lock design can include an initial one-year lock for team and investors, followed by scheduled releases over multiple years, and it can restrict staking for locked balances so early staking rewards flow into public circulation rather than concentrating among insiders.

Step 10 — Bind the public sale to the seller entity and the sale portal’s mechanics. IssuerCo signs the portal agreement, accepts portal eligibility gating, and publishes the sale terms that define the sale window, fixed price, maximum offered tokens, minimum and maximum purchase amounts, allocation mechanics under oversubscription, and delivery timing tied to network launch. The purchaser relationship is formed through the portal’s onboarding and the seller’s sale terms, and the seller document states that the portal operator does not supply or vouch for the seller’s disclosure content.

Step 11 — Describe oversubscription allocation as a deterministic procedure. The sale documentation describes a fill procedure that allocates first to the smallest unfilled requests and iterates upward until supply exhausts, then splits any remainder evenly among still-unfilled purchasers.

Step 12 — Define proceeds flow, custody segmentation, and internal controls. The funds flow specifies that purchasers pay through the portal, the portal remits net proceeds to IssuerCo, and IssuerCo transfers proceeds into FoundationCo under a treasury policy approved by FoundationCo’s board, with defined retention for sale-related liabilities where needed. Treasury operations use segregated wallets for sale inventory, ecosystem allocations, market-maker loan inventory, and operating spend, with multi-signature controls and recorded approvals for transfers, grants, and delegations.

Step 13 — Contract for initial liquidity support through token loans and monitoring. If the project uses professional market makers, IssuerCo enters token loan agreements that define loan size, term, permitted trading conduct, return obligations, and early termination triggers, with a third-party monitoring specialist tracking the use and idle balances of loaned tokens. The documentation can also allow a limited, short-duration provision of initial DEX liquidity from a capped fraction of initial supply, with explicit treatment of those tokens as part of the ecosystem allocation rather than part of the public sale tranche.

Step 14 — Publish a disclosure package that matches the legal and operational map. The seller publishes a disclosure document that covers project information and core contributors, the sale terms and purchaser eligibility gating, token functions and token non-rights, the allocation table and locked/unlocked status at launch, release schedules for locked categories, community distribution mechanics, conflicts statements regarding related-party token transactions, liquidity support arrangements, security posture including audits and open-source repositories, and a risk section that addresses sale execution, entity limitations, token trading liquidity, technology risk, and jurisdictional restrictions.

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Prokopiev Law Group can implement the same token sale legal structure for your project, or tailor the architecture, documentation stack, and disclosure framework to your specific commercial, technical, and jurisdictional requirements. We coordinate a global network of counsel and service providers to support multi-jurisdiction execution from formation through launch and post-launch governance. The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.