After holding an ICO earlier this year, Civil, an Ethereum-based project that aims to give journalists self-governance and immutable proof of ownership over content, is ready to try again.
In a blog post published on December 19, Civil’s CEO Matthew Iles announced that the project will relaunch its ICO in early February 2019 and that it plans to make it easier for those who want to buy the tokens.
In October, Civil had hoped to raise $24 million by selling its CVL token. But, unable to reach a minimum goal of $8 million by a set deadline, the project called off its ICO and returned all of the money it had raised. Participants had to take a relatively complicated test before participating in the ICO, and this barrier to entry may have kept Civil from reaching its minimum goal.
But, this time, Civil promises that things will be different. Illes wrote, “There will be no hard cap, no soft cap, or time limits. Instead, interested members of the public will just buy tokens right from our website, civil.co.” He also noted that those tokens will stay on sale until 34 million are sold.
This fundraising model may raise some questions when applied to the ICO world. If you ask U.S. Securities and Exchange (SEC) Chairman Jay Clayton, most ICOs are securities offerings. And according to the Securities Act of 1933, if you want to sell securities directly to nonaccredited investors — meaning the general public — you need to register with the SEC.
“We have certainly done and continue to do due diligence to ensure that we’re working within existing regulatory frameworks and adhering to guidance that has come out in recent months,” Illes told Distributed in an email. He also said that he does not believe all tokens are automatically securities and that “CVL is designed as a consumer token.” He added, “We’ve put a number of explicit checks in place to prevent speculators from participating [in the ICO].”
He referred Distributed to the “Civil (CVL) Transparency Scorecard,” which outlines the token use on the network.
Unfortunately, Civil will have to do a lot more than prove that its CVL token provides some utility. In December 2017, when the SEC halted the Munchee ICO, the regulator made it clear that even when a token does offer practical use in a network, that does not preclude it from being a security.
Civil recently received some criticism when reporters using it complained that they were not getting paid as promised. Journalists working for Civil’s “newsrooms” were compensated with a mixture of cash and CVL tokens, which accounted for a significant part of their salary. According to CoinDesk, employees were told the coins would be worth $0.75, while tax documents valued them at less than a penny.
Another challenge for Civil is that its biggest backer is not doing so well. Last year, ConsenSys, the Ethereum venture studio founded by Ethereum co-founder Joseph Lubin, put $5 million into Civil. But according to a recent report from The Verge, ConsenSys may be headed for massive layoffs, and it is not clear yet how that might impact Civil.