Approved (Option 3): FAFT vs. AURORA IDO

Proposal title: FAFT vs. AURORA IDO

One-liner: It is suggested to implement additional measures to ensure DAO is meeting FAFT regulations and won’t be subjected to criminal liability with a higher probability

Details:

According to a legal advice, the structure of the IDO currently suggested for the implementation bears quite high risks, which include criminal liability due to the violation of the FAFT rules. Currently Aurora Labs sees three ways how the DAO can react on this flag.

  1. Continue to execute the IDO without any changes and accept the risk.
    • Pros: No changes needed to be implemented
    • Cons: According to the legal advice all DAO members may be treated as violators of the FAFT rules
  2. Keep the tokens distributed through the IDO untransferable until the token holders vote
    • Pros / Comments: Similar to the approach that NEAR OR Polkadot executed. Semi-hard to implement (a section on aurora.dev, where users can login with their Aurora or NEAR wallet and ability to vote), no restrictions on the sale of the untransferable tokens, which ease the access to the sale
    • Cons: According to the legal advice it’s not treated as enough mitigation of the risk at this point; complicated policies and additional explanations to the users that would vote on the making the token transferable
  3. Implement the KYC with a link to the NEAR / Aurora wallet and allow the exchange of the untransferable tokens into transferable only for accounts that pass KYC
    • Pros: Reduces the risk to minimum, semi-hard to implement (a section on aurora.dev, where users can log in with their Aurora or NEAR wallet and integration of the KYC provider)
    • Cons: Negative reaction of the community that is participating in the SmartPad sale; increasing the entry barrier to the sale, which would probably result in more community frustration
    • Comment: The information gathered within KYC process allows to determine the initial distribution of the tokens after the IDO. According to two different advices this info might be requested by authorities; there’re no risks on the people affiliated with Aurora project participation (market manipulation) in case the information provided to all the parties is symmetric

Unfortunately, the FAFT regulation is not 100% clear with respect to the DAOs and their approach to making decisions. That’s why we need to make our own decision on this and if needed implement additional measures insuring the compliance. Aurora Labs is inviting everyone to the discussion.

Rationale: To protect DAO Members and comply with the regulations

Responsible party: Aurora Labs

https://v2.sputnik.fund/#/auroradao.sputnik-dao.near/7