TechFlow news — On September 9, according to Decrypt, as Community Takeovers (CTOs) drive meme coin market caps to new highs, legal experts warn that CTO teams may face multiple legal risks. Charlyn Ho, founder and managing partner at Rikka Law, said the biggest legal risk for CTO teams stems from misleading marketing, unfair or deceptive trading practices, and could even amount to criminal misrepresentation or fraud.
Intellectual property issues are also significant. Andrew Rossow, CEO of AR Media, pointed out that since original developers have typically exited the project, CTO teams continuing to use the original names, logos, and color schemes may infringe on intellectual property rights. He advised CTO teams to proactively contact original developers to obtain proper usage authorization.
In some cases, CTO teams are actually led by the original token deployers, leveraging a decentralized narrative to attract investment. Bitget's Chief Legal Officer Hon Ng emphasized that such arrangements do not exempt teams from legal liability—if their actions are deemed manipulative, fraudulent, or illegal, they will still face legal consequences. Despite the tangible legal risks, given the speculative nature of meme coins, lawyer Jacob Martin believes actual legal enforcement is unlikely. As of publication, prominent CTO projects like Billy and Gigachad have yet to face major legal challenges.
