Accredited Investor Non Transferable NFT Status

The complexities around accredited investor status in the Web3 space is ever evolving and as a result of this continued evolution, we at Dunsmoor Law, P.C. have entered the fray with a non-transferrable (ERC-1238), non-fungible token (“NFT”) for accredited investor (“AI”) status for U.S. natural persons. The purpose of these NFTs is to reduce fraud and participatory lag time in making investments. We’ve seen a number of early-stage startups be led on, sometimes to disclose confidential information, in the pursuit of people who claim to be AI only for excused to be created and investment not to be made. This is not always the case but these NFTs are designed to aid AIs identify themselves to potential investments and reduce the likelihood of fraud in the marketplace.

To further increase the security of our NFTs, we have implemented a two-factor authentication system. This system ensures that only accredited investors can access the token and verify their status. We have also created an on-chain registry for AIs to register themselves with Dunsmoor Law, P.C. and receive their NFTs. The registry is designed to ensure that all registered AIs are verified and their information is kept confidential and secure. This ensures that only verified accredited investors can access the token and verify their status, thus reducing the potential for fraud in the market. Additionally, we are working with other organizations to create a unified standard for AI NFTs so all parties involved can be sure of authenticity of investor status.

There are a number of ways an investor can claim to be AI under securities laws as:

• a bank, savings and loan association, insurance company, registered investment company, business development company, or small business investment company or rural business investment company
• an Securities Exchange Commission (“SEC”)-registered broker-dealer, SEC- or state-registered investment adviser, or exempt reporting adviser
• a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5 million
• an employee benefit plan (within the meaning of the Employee Retirement Income Security Act) if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million
• a tax-exempt charitable organization, corporation, limited liability corporation, or partnership with assets in excess of $5 million
• a director, executive officer, or general partner of the company selling the securities, or any director, executive officer, or general partner of a general partner of that company
• an enterprise in which all the equity owners are accredited investors
• an individual with a net worth or joint net worth with a spouse or spousal equivalent of at least $1 million, not including the value of his or her primary residence
• an individual with income exceeding $200,000 in each of the two most recent calendar years or joint income with a spouse or spousal equivalent exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year or
• a trust with assets exceeding $5 million, not formed only to acquire the securities offered, and whose purchases are directed by a person who meets the legal standard of having sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the prospective investment
• an entity of a type not otherwise qualifying as accredited that own investments in excess of $5 million
• an individual holding in good standing any of the general securities representative license (Series 7), the investment adviser representative license (Series 65), or the private securities offerings representative license (Series 82)
• a knowledgeable employee, as defined in rule 3c-5(a)(4) under the Investment Company Act, of the issuer of securities where that issuer is a 3(c)(1) or 3(c)(7) private fund or
• a family office and its family clients if the family office has assets under management in excess of $5 million and whose prospective investments are directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment[1]

However, we are only focusing on the provision of total net worth for a natural person at this time. There are two (2) separate, mutually exclusive NFTs that will be sent to the investors Ethereum-based wallet after completing Know Your Customer (“KYC”) check from Parallel Markets and verifying net worth with Jonathan C. Dunsmoor, Esq. utilizing the investor’s tax documents and/or on-chain based assets.

• PER ANNUM: A natural person (living human being) maintaining a net worth of at least One (1) Million United States Dollars but not more than Ten (10) Million United States Dollars, individually or jointly with a spouse, not including the value of your primary residence;[2]

OR

• AETERNUS: A natural person (living human being) maintaining a net worth of at exceeding Ten (10) Million United States Dollars, individually or jointly with a spouse, not including the value of your primary residence.

As the names suggest, Per Annum is renewed on a calendar year basis for those with one million up to ten million United States Dollars in net worth. Whereas those AI who have reached the success in life to qualify for Aeternus, have a net worth exceeding ten million United States Dollars and therefore do not need to renew, ever.

If you believe you or someone you know is AI and wishes to be a part of the Web3 investor ecosystem, please fill out the contact form below and we will begin the process. You can also contact Jonathan C. Dunsmoor, Esq. for any questions regarding the application process.

[1] https://www.sec.gov/education/smallbusiness/exemptofferings/faq

[2] “Net worth” means the excess of total assets at fair market value over total liabilities. For the purposes of determining “net worth,” the value of Investor’s primary residence is excluded as an asset. In addition, any liabilities secured by Investor’s primary residence are included in total liabilities for purposes of this calculation only if and to the extent that: (1) such liabilities exceed the fair market value of the residence; or (2) such liabilities were incurred within 60 days before the date hereof (other than as a result of the acquisition of the residence).