Are Token Presales Legal? What Beginners Should Know

If you’ve stumbled onto the idea of crypto presales, you might be wondering: Is this even legal? Am I doing something wrong if the returns look too high? Those are common questions.

‍Presales can look sketchy; you don’t always know the people behind the project, and the opportunities sometimes feel too good to be true. At the same time, presales are also where some of the best opportunities in Web3 appear.

By reading this guide, you’re already ahead. You’re doing your own research, which is the first step to protecting yourself. In this blog, we’ll break down what token presales are, why they exist, how they work, their legal status, and the risks you need to understand as a beginner.

What Is a Presale?

A presale is an event that happens before a token is listed on an exchange. It’s the fundraising phase where a project sells tokens directly to early supporters to raise capital.

In traditional finance, this is similar to a startup going through an incubator or early venture round. In Web3, presales are how many projects fund development before their token hits centralized or decentralized exchanges.

What Is the Purpose of a Presale?

The main purpose of a presale is to raise funds. Presales can be:

• Private rounds (with venture capital investors)
• Public presales (open to retail investors like you)

For public presales, the idea is to give early supporters access to tokens at a discounted price while helping the project secure the resources it needs to grow.

Types of Presales

There are several presale models in Web3:

• ICO (Initial Coin Offering): Projects run their own sale on a website, handling marketing and distribution themselves. Popular during 2017, but often associated with scams and fraud.
  
• IEO (Initial Exchange Offering): Conducted on a centralized exchange, which vets the project and brings it to a larger audience. Often a later-stage option due to higher costs.
  
• IDO (Initial DEX Offering): Uses decentralized exchanges and smart contracts to automate token sales. More transparent but still requires technical know-how.
  
• Launchpads: Platforms designed specifically for token launches, combining funding with incubation and sometimes acceleration. For example, CoinTerminal is an IDO launchpad and accelerator, supporting projects even after their sale.

How Do Crypto Presales Work for Beginners?

If you’re new, here’s what matters most:

1. Know yourself as an investor. Understand your risk tolerance and goals.
2. Use curated sources. Follow trusted platforms and blogs (like CoinTerminal’s beginner guides).
3. Decide what presale model fits you. ICO, IEO, IDO, or launchpads.

Regardless of the type, always make informed decisions.

How Legal Are Crypto Presales?

The legality of presales depends on where the project and the investor are located, and how the presale is structured.

• ICOs: Riskier. Legal status depends entirely on the project team and their jurisdiction.
  
• IEOs and IDOs: Safer. Centralized exchanges and regulated launchpads must comply with anti-money laundering (AML) laws. Founders are vetted (doxxed), and investors must complete KYC (Know Your Customer) checks.

For investors, presale profits usually fall under capital gains tax in most countries. But tax treatment depends on your local legislation, so always verify with your own authorities.

Are Crypto Presales Safe?

There are several risks associated with investing in early-stage crypto projects.

Lack (or Change) of Regulation

Crypto laws vary by country and can shift quickly. A platform available today might be restricted tomorrow.

Potential Scams

ICO-era scams are why many investors now prefer vetted launchpads. Always check legitimacy.

Project Viability

Not every project succeeds. At CoinTerminal, we evaluate secondary liquidity and long-term sustainability before accepting projects.

Changing Market Conditions

Crypto is one of the fastest-moving industries in the world. Market shifts can impact even strong projects. While this isn’t always a “risk,” it’s a defining characteristic of Web3 investing.

Where to Find Upcoming Crypto Presales

• ICOs: Track sites like ICO Drops.
  
• Launchpads: Use CryptoRank to compare platforms.
  
• IEOs: Look directly at centralized exchanges that run token sales.
  
• Socials: Follow trusted KOLs, Telegram channels, and X accounts for updates.

At CoinTerminal, all sales are open access. Complete KYC once, and you can participate in any project we launch.

Final Thoughts

Presales are legal. They are a legitimate way for projects to raise funds in Web3, and a legal way for you as a crypto user to invest. Your returns are also legal to declare, usually as capital gains, depending on the legislation in your country. That’s why it’s important to stay updated on local laws and follow any regulatory changes.

The key is to always be a responsible investor. Do your own research, evaluate projects carefully, and keep up with reliable sources of information.

At CoinTerminal, we make this process easier. Our presales are open access: no token gating, no staking. Complete KYC once, and you’re ready to join any sale. Plus, we run a crypto lottery; even if you request a refund, you still remain eligible to win.

‍Check our active sales today; you could be the next lottery winner.