What rights does your Crypto Token actually give you?

Cryptocurrency is a transformative force with unprecedented opportunities for wealth creation. However, if crypto wants to become a large part of institutional and retail portfolios, it must provide stronger investor protections.

There are several examples of token issuances with morally questionable intent. These aren’t limited to small raises in the obscure corners of the on-chain world. These include the biggest and most high-profile of issuances.

One such example is the EOS token and the journey from Block.one to EOS.IO blockchain to Bullish exchange to BLSH listing.

The EOS Vision: A Record-Breaking Start

The largest and most successful ICO in history is the EOS ICO. From June 2017 to June 2018, Block.one raised $4.2 billion to build the EOS.IO blockchain, a delegated proof-of-stake platform designed for high scalability and zero transaction fees. In other words, “an “ETH Killer”. To put the crypto community’s belief in EOS’s potential into perspective, note that the second-largest ICO in history is Telegram’s $1.7 billion TON.

EOS’s Challenges: A Dream Deferred

Launched in 2018, EOS faced hurdles that tempered its lofty ambitions. Critics pointed to its centralized structure, relying on just 21 block producers, and governance issues that hindered dApp adoption. In 2022, EOS Network Foundation CEO Yves La Rose labelled it “a failure” due to Block.one’s unfulfilled promises.

To be fair, EOS isn’t entirely defunct; it continues to operate and even saw some positive narrative in 2024–25, possibly timed to build buzz around the Bullish IPO. Critics call it an outright flop, while optimists view it as merely underwhelming.

A Strategic Pivot: From EOS to Bullish

Block.one didn’t channel all $4.2 billion into EOS blockchain development. Instead, it invested heavily in Bitcoin, amassing 164,000 BTC by 2021, a move that paid off as crypto markets soared.

In 2021, the company launched Bullish, a hybrid crypto exchange, capitalized with $100 million in cash, 164,000 BTC, and 20 million EOS tokens.

Bullish later acquired CoinDesk, a leading crypto media platform.

Bullish then went public on the NYSE as BLSH in August 2025, with its Bitcoin holdings reduced to about 24,300 BTC by the time of the IPO.

The Ethical Dilemma

This pivot, while savvy, enriched the Block.one team and left EOS token holders with nothing. This move raises two concerns:

1. The ICO was marketed as a means to fund EOS.IO, but funds were diverted to Bitcoin and then Bullish.

2. EOS token holders did not benefit from the upside from BTC bought with funds provided by them, or the listing of Bullish, which was capitalized by the BTC bought with the funds provided by them.

Tokens vs. Shares: A Tale of Rights

If EOS had been a publicly traded stock, its $4.2 billion raise would have granted shareholders rights to any gains or losses, regardless of whether the funds were allocated to blockchain development, Bitcoin, or a new exchange. Contrast this with EOS token holders, who had no say when funds were redirected and got no shares when BLSH listed on the NYSE.

Consider a parallel from traditional finance. Sears Holdings Corporation, parent of Sears and Kmart, saw its retail business falter due to competition from e-commerce. Yet, its portfolio of over 1,700 prime real estate locations, valued in the billions, boosted share prices through spin-offs like Seritage REIT, directly benefiting shareholders.

In the crypto world, token holders often lack such protections, relying on project promises rather than enforceable rights.

The Legal Fight: A Modest Reckoning

Token holders, feeling misled, sued Block.one for fraud and deceptive ICO claims, securing a $22 million settlement in 2023, a fraction of the $4.2 billion raised. Notably, the SEC imposed a $24 million fine in 2019 for unregistered securities sales, exceeding the amount of the fraud settlement. Legally, Block.one was in the clear, as EOS tokens were sold as utilities, not equity, freeing the company from obligations to share gains.

$4.2 billion buys you some good lawyers.

Crypto’s Path to Maturity: Balancing Freedom and Fairness

Crypto’s allure lies in its freedom from traditional financial constraints, but this can’t come at the expense of investor trust. The industry has pushed for tokens to avoid securities classification, citing the cost of compliance. Yet, without regulation, token holders are left vulnerable, their investments tied to narratives rather than rights.

Regulation: Crypto’s Bridge to the Big Leagues

Crypto’s potential to become a mainstay in major portfolios, think pension funds, endowments, and retail accounts, hinges on trust. Blindly applying securities regulation to tokens is not what I’m suggesting. But consumer protection in the form of legally binding voting rights, transparency, and a share in gains is needed.

The EOS case, where token holders were sidelined as funds fuelled a new empire, shows what’s at stake.

Self-Regulation

In recent times, things have already been improving for token holders. They’re enjoying a greater share in the economic upside without outright regulatory protections. For example, earlier, revenues went to project teams or VCs. Today, some of the revenues are being used to buy back tokens. This creates scarcity, benefiting long-term holders of the token.

Hyperliquid allocates 97% of revenues for HYPE token buybacks. It has spent over $644 million in 2025 alone. Inspired by Hyperliquid, Aave, Jupiter, dYdX, Arbitrum, Pump.fun, and LayerZero have introduced similar buybacks.