Token Delivery Disputes: What Investors Should Know

A token purchase agreement or a Simple Agreement for Future Tokens (SAFT) can become a point of contention when a crypto project fails to deliver tokens as expected. Michael Handelsman, a lawyer at Kelman Law, advises investors to carefully review their agreements and understand the terms of their investment. The expected launch date may have passed, and the project may be asking investors to accept a longer vesting schedule, a smaller allocation, or tokens issued by a different entity.

Before making any decisions, investors should examine the agreement, the events that triggered delivery, and the evidence of what happened. A missed expectation does not necessarily establish a breach, and the project's explanation for the delay should be tested against its actual obligations. The agreement may provide different rights, such as token warrants, direct purchase agreements, or advisory agreements.

Investors should identify the legal entity that owes the obligation, the token and quantity, or the formula for calculating their allocation. They should also consider what happens if the project never launches or winds down and who can amend the terms and what approvals are required. A projected launch date in a pitch deck may not be a binding deadline, and token delivery may not be the same as vesting and the ability to sell.

Handelsman recommends that investors preserve evidence before discussions move further, including executed agreements, side letters, and proposed amendments. They should also keep payment records, transaction hashes, and relevant wallet addresses. Investors should be cautious when accepting revised terms and ensure that they understand the changes and the scope of the authority of the issuer.