What must a token's white paper disclose about supply, and what are the red flags?
Under the EU's MiCA rules, a white paper must, among other things, give the number of tokens offered, the number the issuer keeps, any limits on transfers and how any mechanism that raises or lowers supply in response to demand works, and it may not make claims about the token's future value.1,2 In this lesson, a red flag is anything the documents say that the chain does not show.
This lesson describes public rules in general terms. It is not legal advice, and laws change. We read the texts on 22 October 2026. Module 27 explains when MiCA and US securities law apply; ask a lawyer about your own case.2,3
MiCA's white paper rules
The EU's Markets in Crypto-Assets Regulation is known as MiCA. Its rules for most tokens have applied since 30 December 2024; for those tokens, it requires a crypto-asset white paper before an offer to the public. Module 27 covers when.2
Article 6 says the information must be fair, clear and not misleading, with no material omissions.2 It also says the white paper must not make claims about the token's future value.2 Instead, it must warn that the token may lose some or all of its value, may not always be transferable and may not be liquid.2
Annex I lists what goes in. These items matter most for tokenomics.1
| Annex I item | What it asks for |
|---|---|
| Part D(3) | Details of everyone involved in the project, such as advisors, the development team and service providers1 |
| Part E(5) | Where it applies, the total number of tokens offered or admitted to trading1 |
| Part E(8) | The phases of the offer, including any discounted prices for early buyers1 |
| Part E(18) | Possible conflicts of interest of the people involved1 |
| Part G(3) | Future offers, and the number of tokens the issuer keeps for itself1 |
| Part G(7) | Any restrictions on transferring the tokens1 |
| Part G(8) | How any mechanism that raises or lowers supply in response to demand works1 |
The SEC staff's list
In April 2025, staff in the SEC's Division of Corporation Finance gave examples of the supply information they had seen issuers disclose when offering or registering crypto-related securities.3
- The total supply, and whether it has a fixed maximum.3
- How tokens are created, and whether all at once or over time.3
- Any way tokens can be redeemed, retired, frozen or burned.3
- Any supply kept for the treasury, particular uses or particular people, and any vesting or lock-ups.3
- Who sets the supply rules, and who can change them.3
- Any deal with market makers to distribute the token or provide liquidity, and its terms.3
The staff said the statement is not an SEC rule and has no legal force or effect.3
In August 2026 the SEC proposed rules, called Regulation Crypto Assets, under which issuers using two new exemptions for some crypto-asset offerings would have to make certain disclosures. When we checked on 24 October 2026, they were still a proposal.4
When the documents and the chain disagree
The SafeMoon case shows what is at stake. A February 2026 release from the criminal investigation unit of the US tax agency, the IRS, reported the outcome in a US federal court.5
- The verdict. SafeMoon's chief executive was convicted by a jury in May 2025, and sentenced in February 2026 to 100 months in prison for conspiracy to commit securities fraud, wire fraud and money laundering.5 Later that month he filed a notice of appeal; we found no ruling on it as of 24 October 2026.6
- What investors were told. That SafeMoon relied on "locked" liquidity pools, and that the lock stopped insiders from taking liquidity out of them. A liquidity pool holds pairs of tokens that other people can trade against.5,7
- What happened. The release said the defendants kept access to those pools, and used it to divert millions of dollars' worth of tokens for themselves.5
- What they said about trading. The release said they publicly denied holding or trading the token, but repeatedly bought and sold it.5
Red flags
- Numbers the chain doesn't match. The total supply should match the contract's totalSupply. Tokens called "locked" should sit at addresses you can check.8,9
- "Locked" claims nobody can check. As the SafeMoon case shows, a word in a document is not a lock.5
- Selling ahead of the schedule. In its best practices for projects launching or listing a token, Binance says tokens must not be sold, released or distributed ahead of agreed timelines. It also says market makers should respect release schedules.7
- Hidden market maker deals. Binance says token loan agreements should clearly define how the tokens may be used, and that projects should report their market maker's details to the listing platform. Module 19 explains these loans.7
- A very low float and a very high FDV. Binance Research says this mix leaves a lot of supply still to arrive (lesson 2).10
- Promises about price. MiCA bars a white paper from claiming what the token will be worth.2
- Regulation (EU) 2023/1114 on markets in crypto-assets (MiCA), Annex I: disclosure items for the white paper of crypto-assets other than asset-referenced tokens or e-money tokens. Official Journal of the European Union (EUR-Lex asked for a browser check; read via the Wayback Machine copy of 11 September 2026), 31 May 2023.
- Regulation (EU) 2023/1114 on markets in crypto-assets (MiCA), Article 6: content and form of the crypto-asset white paper. Official Journal of the European Union (EUR-Lex asked for a browser check; read via the Wayback Machine copies of 11 and 26 September 2026), 31 May 2023.
- Offerings and Registrations of Securities in the Crypto Asset Markets (staff statement). US Securities and Exchange Commission, Division of Corporation Finance, 10 April 2025.
- SEC Proposes New Regulation Crypto Assets (press release 2026-76). US Securities and Exchange Commission (the SEC's rule page for file S7-2026-27 still listed it as a proposed rule when we read it on 24 October 2026), 18 August 2026.
- CEO of digital asset company SafeMoon sentenced to 100 months in prison for multimillion dollar crypto-fraud scheme. IRS Criminal Investigation, US Internal Revenue Service (press release), 10 February 2026.
- Criminal docket no. 1:23-cr-00433, US District Court for the Eastern District of New York (the SafeMoon case). CourtListener, Free Law Project (the live page blocked our request, so we read the Wayback Machine copy of 17 March 2026; we also read CourtListener's case search on 24 October 2026, which showed the notice of appeal and no appeal ruling).
- Market Maker Red Flags and Guidelines for Crypto Projects and Users. Binance Blog (read via the Wayback Machine copy of 28 May 2026), 25 March 2026.
- ERC-20: Token Standard. Ethereum Improvement Proposals (Vogelsteller and Buterin), status Final, created 19 November 2015.
- Methodology. CoinGecko (the live page asked for a browser check; read via the Wayback Machine copy of 8 October 2026).
- Low Float & High FDV: How Did We Get Here?. Binance Research, May 2024.
General education built from the publicly available sources listed above. Not financial, legal, tax or investment advice. Naming a company, project or regulator is not an endorsement either way. Last checked 2026-10-24. Terms and disclaimer.