Legion Proposes AI-Powered Compliance for Crypto ICOs to the SEC

Legion, a new token launch platform, is proposing an automated disclosure system to the Securities and Exchange Commission (SEC) to improve the regulation of Initial Coin Offerings (ICOs).

Matthew O'Connor, co-founder of Legion, presented the "Pathfinder" pilot program, a system designed to convert raw blockchain data into compliance reports for crypto projects. This aims to address challenges faced by regulators amid staff cuts and the increasing complexity of the crypto industry.

How Pathfinder Works

The "Post-TGE Automated Disclosure System" tool within Pathfinder will monitor token sales by team members, unauthorized minting, and governance changes made without authorization, after a Token Generation Event (TGE).

Key features include:

• Automated detection of violations.
• Immediate notifications to TGE participants via email and public dashboards.
• API notifications for integrated projects.

Benefits of Automated Disclosure

This system promises increased transparency and investor protection, potentially mitigating scandalous behavior often observed in new token projects.

O'Connor hopes Pathfinder can inform future market structure bills, learning from regulations like Europe’s MiCA framework. The program would provide a safe space for crypto companies to experiment, while giving the SEC insights into live ICO environments.

The SEC's initial response has been positive, leading to ongoing discussions.

Key Takeaways

• Legion proposes using AI to automate compliance for crypto ICOs.
• The system monitors token events and alerts stakeholders to violations.
• The proposal seeks to improve investor protection and inform future crypto regulations.