Author: Kirk Phillips, CPA, CMA, CFE, CBP
Published: March 31, 2020
Determining what constitutes dominion and control (D&C) for crypto assets requires a technical understanding of hard forks and airdrops and, more specifically, hard forks resulting in chain splits.
The tax significance of chain splits and airdrops, including the character of income, timing, and other tax-related issues, will be addressed in other white papers. This paper intends to identify actions exerted by taxpayers with their crypto assets manifesting dominion and control at a particular point in time.
Acquire the ability
The critical distinction for income recognition is contingent on whether a taxpayer exercises dominion and control. A taxpayer would not recognize income until and unless they exercise dominion and control. Taxpayers have dominion and control when they “acquire the ability” to transfer, sell, exchange, or otherwise dispose of the cryptocurrency.
The following IRS guidance affirms this definition of dominion and control:
The IRS Virtual Currency FAQs (October 2019) A.23 states, “…you have dominion and control over the cryptocurrency so that you can transfer, sell, exchange, or otherwise dispose of the cryptocurrency.” 1
Rev. Rul. 2019-24, states, “If the taxpayer later acquires the ability to transfer, sell, exchange, or otherwise dispose of the cryptocurrency, the taxpayer is treated as receiving the cryptocurrency at that time.” 2
If “acquiring the ability” can be distinguished, then dominion and control can be determined. Furthermore, the AICPA suggests chain-split coins and airdrops are unsolicited property referring to Rev. Rul. 70-498 and Rev Rul. 63-225, wherein both situations the mere receipt of unsolicited property, for example, free samples, did not constitute income. The taxpayer has to “accept the property,” and possession does not automatically equal acceptance. 3
Hard fork and airdrop confusion
The terms fork and airdrop aren’t used in practice consistently, and there isn’t a standard definition, especially when it comes to airdrops. A hard fork resulting in a chain-split and an airdrop are two completely independent and unrelated events. The terminology used in the recent IRS guidance refers to “receiving cryptocurrency from an airdrop following a hard fork,” which is alternatively referred to as “a hard fork followed by an airdrop.” These events are distinctly different and never happen simultaneously or consecutively in any related way. Coin Center echoed the sentiment, “…it is mistaken to believe that forks and airdrops are sequentially related events.” 4 Similarly, the AICPA stated, “Many taxpayers interpreted the ruling as not applying to either the Ethereum or the Bitcoin chain splits since neither was a hard fork followed by an airdrop.” 5
The term “fork” has several different meanings in the blockchain context, which creates additional confusion. The two most common definitions are “forking the codebase,” referring to copying the codebase of open source software to create a new blockchain and “blockchain forks,” which may or may not result in a chain split. Also, there are hard forks and soft forks, however hard forks, or consensus-based rule changes, are not backward compatible. Only hard forks can result in chain splits as a result of the incompatibility. Hard forks are sometimes referred to as if they are synonymous with chain-splits; however, only hard forks resulting in chain-splits produce chain split coins.
Examples of hard forks resulting in chain-splits and chain-split coins The two most well-known chain-splits and therefore chain-split coins are:
– Ethereum (ETH) and Ethereum Classic (ETC) on 7-2-16 (1 ETH: 1 ETC) – Bitcoin (BTC) and Bitcoin Cash (BCH) on 8-1-17 (1 BTC: 1 BCH)
The DAO hack and Two Ethereum
The DAO was a decentralized investment fund of sorts built with Ethereum; however, a hacker drained $50MM in June 2016 from a record-setting $150MM ICO at the time. 6The Ethereum community chose to roll back the blockchain via hard fork to “reverse the theft” and get the ETH back. A small group of dissenting miners was steadfast in believing “Code is Law” and blockchain immutability shouldn’t be compromised at any cost. 7The minority miners continued mining the original chain, Ethereum, with native token ETH, which “branched” into Ethereum Classic with native token ETC effectuating the chain-split on July 20, 2016. Every ETH token holder who controlled their private keys before the split is entitled to the same number of tokens on the new chain. Chain-split coins always exist on a 1:1 basis. 8 Coin Center explains it like this, “A better term for a blockchain fork that leads to two divergent cryptocurrencies would be a contentious fork…In a contentious fork, both networks recognize these pre-fork balances as valid; so, in that sense, a user of the pre-fork chain will, by no action of her own, “have” tokens on both networks post-split. 9
Dominion and control of chain-split coins
Chain-split coins are at the center of whether or not someone manifests dominion and control. The chain-split coins are like conjoined twins requiring “technical surgery” in some cases to split the coins into two separate coins. This technical splitting is exercising dominion and control and always involves action on behalf of the token holder. The token holder does not have possession of the new coins outright upon the chain-split, and possession and acceptance happen simultaneously when and if they successfully split their coins.
Risks of “acquiring chain-split coins”
Coin-splitting always involves a high degree of coin-split risk comprised of six main vectors, and many of the risks are interrelated.
- Security risk
- Privacy risk
- New software risk
- Fraud risk
- Casualty risk
- Replay risk
Splitting coins requires a high degree of preparation and a series of carefully executed steps to mitigate coin-split risk. Pre-chain-split coins are akin to identical conjoined twins sharing the same DNA except with bitcoin; it means sharing the same private keys or mnemonic seeds and addresses.
Security and privacy
If crypto security is compromised, it could lead to theft. Generally, token holders should sweep their BTC, for example, to a new address or wallet. Otherwise, the “shared DNA” could reveal all previous transaction history of the pre-split bitcoin and connect it to new chain split coins, BCH for example. Additionally, both the public key and private key could be compromised, resulting in a loss of funds in the worst case. Bitcoin Magazine stated, “The bad news is that it’s not necessarily easy or safe to claim your BCH straight away. If you are not careful, you may accidentally expose your private keys while claiming your BCH. And because these are the same private keys that secure your BTC, this could lead to your BTC being stolen.” 10
The same thing that happens on one chain, post-split, can also occur on the other chain without special replay protection. Replay vulnerabilities can be malicious (replay attack) or inadvertent. Circle describes what can happen when reply protection is not available, “This confusion can lead to token holders unintentionally sending transactions on one of the new chains, resulting in a loss of funds.”11 Bitcoin Cash, for example, built replay protection into the protocol, and some splitting tools also include a method for reply protection. Nonetheless, someone could successfully split coins and still be subject to reply attacks years down the line if they did NOT incorporate reply protection during the splitting process.12
New software risk & Fraud risk
Wallets, exchanges, miners, and nodes have to upgrade and/or create new software compatible with the new chain. Developers may or may not be proactive, depending on how much they anticipate the chain-split. Most upgrades tend to happen rapidly, post-split, introducing significant bugs. Meanwhile, nefarious actors swoop in to steal coins offering the most “user-friendly” splitting tool, which sends users’ coins to the hacker’s address. Bitcoin Magazine describes the new software risk like this, “It is all very new, developed within a short timeframe, and the peer review done on all this software has probably not been as extensive as it usually is within the Bitcoin space. It is therefore probably wise not to import your private keys in such software right away; instead, wait to see if there are any reports of problems.”13
The loss of funds is a “casualty or theft loss” in the context of taxation. A casualty loss comes from making user mistakes, not following directions, or from a wallet bug (new software risk). Theft is essentially fraud risk and a subcategory of casualty losses.
Steps for “acquiring chain-split coins” (and manifesting dominion and control)
Step 1: Identify wallets with pre-split coins
The specific wallets holding pre-split coins can determine the approach for splitting the coins. If coins are in three different wallets, it could magnify the effort three-fold by requiring three different methods. For example, Alice had BTC in a paper wallet, hardware, a desktop wallet, and an exchange. Alice can’t do anything with her BTC on the exchange because she doesn’t control the private keys. Remember the “not your keys, not your coins” mantra.
Step 2: Research trusted resources
Alice does extensive research reading chain-split articles on trusted news sites and specifically the websites for her particular wallets. For example, she has a Trezor hardware wallet and visits their site, hoping to find a BTC~BCH chain split guide. She continues to monitor new publications for additional information.
Step 3: Assess the Risk
Alice has to navigate and consider all the risks mentioned above of acquiring chain-split coins. Fortunately, she is pretty crypto savvy, yet feels overwhelmed with all the content from her extensive research. The risk is exceptionally high right after the chain-split. It goes down over time as users and developers identify bugs, scams get exposed, split wallets develop split guides, and services improve.
The risk assessment is a cost-benefit exercise, and the risk of losing BTC, compromising privacy, or getting scammed can be far higher than the value of acquiring BCH. Bob only has 3.3 BTC, and therefore his upside is the potential value of 3.3 BCH when he acquires it. Alice, on the other hand, has 1,178 BTC, so she is more motivated to navigate the risk to get her 1,178 BCH, which at one point could have been worth millions of dollars. Bob chooses not to split now because the risk is too high, but he can always do so at another time. Alice sees dollar signs and elects to go for it.
Step 4: Choose the splitting method
Alice has to use three different chain-splitting ways for each of her three wallets. She’s using guides for each wallet, including additional steps to follow for best practices as a result of her preliminary research. She’s not confident about splitting her paper wallet BTC, so she’s going to defer splitting those coins until a later time. See below for more information on the types of splitting methods.
Step 5: Prepare to split: Move pre-split coins
Alice needs to import her BTC private keys into the new BCH version of her desktop wallet. Importing keys is one way to acquire coins because BTC and BCH both share the same DNA. She knows the software could be buggy, and she doesn’t fully trust the wallet developers. Alice sweeps her BTC from the original pre-split wallet to a new wallet with a fresh set of private keys. She imports the original private keys into the new BCH wallet, thereby thwarting any attempts by nefarious wallet developers who could steal private keys. Those bad actors can’t steal Alice’s BTC using her original private keys because the BTC resides in a new wallet with new keys. Sweeping coins to a new address may or may not add reply protection depending on the wallet and the method in Step 4.
Step 6: Consider replay protection
During her research in Step 2, Alice discovered her desktop wallet provides reply protection within the coin-splitting feature. In this case, she doesn’t have to take additional steps for reply protection. Bitcoin Cash has reply protection at the protocol level while Bitcoin SV (another chain split from BCH) does not.
Edge wallet states, “Included in the split function is some home-brewed replay protection. Replay protection was not added at the protocol level of the BCH-BSV chain-split but we were able to implement replay protection for Edge users which prevents funds from one chain from being spent on another.” 14
Wallets or other services may or may not provide replay protection; therefore, users may have to create their own. For example, Alice sends some BTC dust (a very tiny amount of BTC) to the old BTC address before sweeping her BTC to a new wallet as she did in Step 5. The dust essentially taints the original coins so they can’t be spent on the new chain. Splitting tools also use dust to separate the coins, as explained by Bitcoin.com, “When this small amount of dust is mixed with the original BCH funds the coins will automatically split into two.” 15
Step 7: Follow the guides & split the coins
Now that Alice has completed her due diligence, research, risk assessment, and pre-split preparation, she’s ready for the next steps to split the coins. She follows the guide step-by-step, creates a new wallet and related addresses for BCH as necessary, sends a BTC transaction, and receives the pre-split BTC back. She also receives BCH in the same wallet or a new BCH wallet, depending on the situation. See below for more information on the types of splitting methods.
Step 8: Document the process
Alice verifies the BTC and the BCH on respective block explorers and saves the transaction IDs for both transactions from both chains. Alice acquires the new coin, and dominion and control manifest at this point. She takes screenshots and detailed notes to document the entire splitting process from beginning to end for tax purposes and as an internal reference guide. Excellent documentation can be used for future chain-splits and makes the process much easier the second time around.
Types of coin-splitting methods
Exchange splitting services
Crypto exchanges provide splitting services as a convenience to their customers. Alice could have sent BTC to an exchange which splits the tokens without any additional effort by the customer. The service is a fast and easy method; however, it compromises privacy because exchange addresses are generally known, and it requires trusting a third party with the funds. 16
Crypto held on exchanges
This exchange splitting service should not be confused with BTC held on an exchange before a chain-split. As mentioned, the customer does not control keys in this case, and an exchange may or may not credit chain split coins to a customer’s account based on the exchange’s discretion and their terms and conditions. A customer would have dominion and control if and when the exchange credits the customers’ exchange account with the new tokens.
Wallets with splitting features
Wallets upgrade to provide coins splitting functions while publishing-related coin-splitting guides, which may allow users to separate their BCH and BTC within the same wallet. Guides are published be hardware wallets, desktop wallets, and others.17
Third-party splitting services provide a tool for splitting coins independent of wallets or centralized exchanges. Shapeshift, a non-custodial exchange created a splitting tool for ETH and ETC.18
Importing private keys (do-it-yourself) splits
Alice took the DIY approach in Step 5 by sweeping her BTC into a new wallet in preparation for importing her old BTC private keys into her new BCH wallet. This method involves more skill and has more risk, especially when contrasted with exchange splitting services.
Smart contract splits
Most of the examples highlighted BTC and BCH, but the same principles can apply to other chain splits. Ethereum is a smart contract platform; therefore, token holders can split ETH and ETC coins using a smart contract, which introduces another degree of risk and complexity. For example, Alice sends her ETH to the smart contract which sends back the original ETH and sends the ETC to a new ETC wallet Alice created.
ETH~ETC Case study
How much work is it? How long does it take? This smart contract split sounds simple; however, in one case study splitting ETH and ETC took several days and more than 14 hours. The investor’s time included considering the chain-split risk of acquiring the coins, all the steps for acquiring the coins, including best practices for documentation, the various methods for splitting the coins, setting up new wallets and addresses, and consultation with a highly reputable developer in the space. The coin split didn’t take place until two years after the ETH~ETC chain split. 19
A metaphor for claiming chain split coins
Money does grow on trees, and in the case of chain-split coins, it grows on trees inside a barbed wire fence secured by dogs and armed guards. It’s your tree and your money, and you can see the money on the tree from outside the fence. You have to choose whether retrieving the money (picking those apples and oranges from the tree) is worth the risk.
Conclusion: D&C of chain-split coins
Coin-splitting can be easier in some cases rather than others, and there’s substantial risk in choosing to split coins. There can be significant work during the research and due diligence phase before determining whether or not to proceed with a coin-split. The actual preparation and coin-spitting process can also take considerable time depending on the skill level, confidence, and experience of the token holder. Acquiring chain-split coins requires extreme effort, and the point when dominion control manifests is particular and verifiable on respective blockchains with a timestamped transaction ID. Dominion and control never happen at the point when a chain-split occurs; instead, it can only happen at a later point in time if and when a token holder completes the coin-split.
An airdrop is a cryptocurrency distribution based on existing token holdings or addresses, sometimes without the token holder’s knowledge, to bootstrap a new blockchain. There are many different kinds of airdrops, making it difficult to define the term. In most cases, there is little to no risk or action required to get free tokens. A token holder can have “possession” of a new airdropped token without knowing it. A few examples of definitions help explain the concept of an airdrop.
Three examples of airdrop definitions:
- “What are crypto airdrops? Funny enough, this isn’t as easy to explain as it looks…A cryptocurrency airdrop is a free coin giveaway in the blockchain industry.” “Personally, I find the easiest comparison in the real world to be freebies you receive on the street…That’s a free sample, that’s an airdrop!” 20
- “Cryptocurrency airdrops are basically free coins that are dropped directly into your wallet. It is literally free money handed over to you!” 21
- “In the cryptocurrency and blockchain ecosystem, the term “Airdrop” refers to the distribution of digital assets to the public, either by virtue of holding a certain other token or simply by virtue of being an active wallet address on a particular blockchain.”22
Tokens holders must control the private keys for a given wallet to receive airdropped tokens. Exchange customers do not control their own private keys however, exchanges may or may not credit their customers with airdrops (or chain-split coins) depending on technological complexity, existing terms and conditions and other considerations. Exchanges are trending towards crediting customers with airdrops because of increased competition and the desire to retain loyal customers. Tokens held on exchanges will not be included in a snapshot or any other airdrop method because the token holder does not control the private keys.
Types of airdrops
Airdrops are typically promotional in nature, so the project team can design an airdrop in any creative way to get the most awareness. Any particular airdrop could have its nuances; however, it’s essential to examine the fundamentals to distinguish when a taxpayer “acquires the ability” to transfer, sell, exchange, or otherwise dispose of the airdropped cryptocurrency to determine when dominion and control manifests.
Two main types of airdrops (snapshot & giveaways)
Airdrops fall into two main buckets, snapshots, and giveaways. A snapshot is a particular type of airdrop, and all other airdrops are mostly giveaways or a “catch-all” category for everything else.
Giveaways fall into three subcategories, standard, bounty, or exclusive. The typical standard giveaway requires someone to supply name, email, and crypto address for receiving tokens or simply the most basic information needed to give tokens away. The typical bounty is like the standard giveaway, but it requires additional “user actions” to qualify for the token giveaway. For example, the prospective token holder has to join a Telegram channel, a Facebook group, and make a tweet or Facebook post promoting the project. The exclusive giveaway could be like the standard or bounty, except the airdrop is “exclusive” only to a certain group of people based on loyalty or some other metric. 23
Examples of giveaways:
Polymath, a security token platform, initiated a 10MM token giveaway in total and 250 POLY tokens for each registered user to promote the platform. Users had to sign up, complete a KYC check, and include and ETH address to get POLY tokens. The user acquired the ability to access the coins by successfully registering on the platform.
“Only users who signed-up for the Airdrop at polymath. network prior to January 10th are eligible to receive the free POLY tokens. Due to the above legal requirements, you must also comply with the terms and conditions and verify your identity through our KYC portal at token.polymath.network” 24
Stellar created an XLM token giveaway token in partnership with Keybase, an encrypted messaging app over a 20-month period to simulate adoption on both platforms. Keybase users needed an active account before the monthly airdrop to claim a portion of that month’s token rewards. Keybase users can claim free XLM when they open the messaging app. The taxpayer has to generate keys to a new wallet within Keybase to claim the XLM. The taxpayer exercises dominion and control upon generating the keys, which can be verified by a transaction ID. 25
Acquiring giveaway airdrop tokens
Prospective token holders always take action, such as supplying an email, providing a crypto address, or tweeting as a precursor to receiving tokens; therefore, they complete the work to acquire the tokens BEFORE the tokens are “airdropped.” The prospective token holder actively participates prior the actual airdrop and they are always aware of the airdrop before and after it happens because of their active participation. This is contrary to the way snapshots work as explained below.
Next, the new blockchain has to launch and actually distribute the tokens as promised. If the project never distributes tokens, then there is nothing else to consider because no tokens were acquired. The token holder already established control as explained above and, therefore, if the airdrop takes place, they can immediately transfer, sell, exchange, or otherwise dispose of the tokens. Dominion and control manifest at the time of the airdrop, which should be verifiable by a transaction hash.
A snapshot of an existing blockchain and related address balances at a point in time (time 0), is typically used to make a pro rata distribution of new tokens at a later point in time (time 1). A snapshot is a blockchain state at a given time, which is like taking a picture of the blockchain.
There are two main types of snapshots, token standard airdrops, and codebase forking airdrops. Project teams can easily create tokens with token standards and distributed on top of an existing blockchain. Developers use codebase forking to create a new blockchain, and the native tokens of the new blockchain are distributed based on the snapshot of another blockchain.
Most airdrops happen on Ethereum because the ERC-20 standard tokens are easy to create on the existing network. Newly created ERC-20 tokens are automatically compatible with Ethereum wallets, which means new wallet software isn’t needed. The airdrop could also be done based on the number of active addresses rather than pro rata. Other blockchains such as NEO and Tron have token standards, NEP-5 and TRC10/20, respectively, similar to Ethereum.
Example of token standard airdrop
OmiseGo was one of the original ERC-20 token airdrops on Ethereum. Anyone holding ETH before the snapshot would receive a pro rata share of OMG tokens. ETH must be kept in an Ethereum wallet such as My Ether Wallet in which the user owns and controls the private keys. Therefore, ERC-20 token airdrops can happen WITHOUT the token holder’s knowledge.
OmiseGo’s airdrop announcement states, “In OMG’s case, 5% has already been set aside from the total issuance, ready to be distributed by an automatic airdrop. That is, sometime quite soon (TBA soon), every address on the Ethereum blockchain that held a balance over a minimum threshold of 0.1 ETH at a recent past block height (TBA soon) will receive a share of this 5% that is proportionate to their share of ETH.” 26
Acquiring token standard airdrops
Prospective tokens holders do work to acquire the tokens AFTER the tokens are “airdropped.” The prospective token holder passively participates before the actual airdrop. The only prerequisite to getting XYZ tokens is having ABC tokens or an ABC token address. Most of the time, tokens holders already have ABC tokens, and the possibility of getting XYZ tokens is a bonus; however, someone can rush out and buy ABC tokens and set up a wallet in anticipated of the airdrop. Token holders may or may NOT know about the airdrop before or after it happens.
Tokens airdropped using the token standard method are using smart contracts for the distribution. Even though the new tokens are compatible with existing wallets, the tokens don’t magically appear in a wallet. My Ether Wallet will not show OMG tokens, for example, unless the token holder clicks the “add custom token” feature for a particular coin. Meanwhile, an ETH address search on Etherscan, an ETH block explorer, will show an OMG transaction on the ERC-20 token tab for that address. If a token holder goes back to their ETH wallet, clicks “custom token” and adds the smart contract address, token symbol, and decimal places, the token balance will appear in their wallet. 27
Free samples analogy
Token standard airdrops are akin to getting unsolicited property, free book samples, or soap samples in your mailbox, except in the case of crypto, the user may have NO idea the OMG airdrop existed. At the time of the airdrop, the user can transfer, sell, exchange, or otherwise dispose of the tokens. Most of the time, the tokens are worthless, and there is no active trading market. The user has possession but hasn’t necessarily accepted the coins as her own, therefore acceptance could be selling the tokens at a later time when they have value. An OMG token sale could reflect acceptance and exercising dominion and control. “The dominion and control doctrine applies to rights and property received, but not paid for, by a taxpayer, including unsolicited property such as free samples and security purchase rights,” explains Jim Calvin, Global Tax Leader, Deloitte, and further, “A sale of rights, as in Rev. Rul. 63–225, is not the only method of exercising dominion and control; however, by selling the taxpayer made it plainly evident that he was able to, and, in fact, did exercise dominion and control…” 28
Codebase “forking” airdrops
The concept of taking a blockchain snapshot is the same for token standard airdrops and codebase forking airdrops. This part of the process defines who gets tokens and how many. The similarities stop there as the distribution method is what makes each of these methods different.
Developers use “codebase forking” to modify the codebase of an existing blockchain, which is usually the same blockchain used for the snapshot. The new blockchain team distributes tokens on a new blockchain based on the snapshot of a preexisting blockchain. The new blockchain could be developed using an entirely new code, but the DNA of the new blockchain is usually related to the old blockchain. The private keys for tokens on the pre-existing blockchain are the gateway to accessing the airdropped tokens on the new blockchain which should not be confused with accessing chain-split coins. Codebase forking means creating a brand new blockchain rather than a hard fork resulting in a chain-split with two branches sharing a common trunk.
Example of a codebase forking airdrop
The NXT blockchain has been around since 2014. Ardor, a new blockchain built on NXT technology, launched introducing the concept of child transaction chains that rely on the parent chain, Ardor, for security. IGNIS was also the first child chain of Ardor. A NXT snapshot created the opportunity for NXT token holders to claim both IGNIS and ARDR tokens based on different methodologies.
Ardor states, “The Ardor Genesis Snapshot was taken at block height 1636363 on the Nxt blockchain. The Ardor Blockchain Platform launched as planned, on January 1, 2018. All NXT holders…will find their ARDOR and IGNIS tokens on the Ardor blockchain, accessible using the same account number and password as for the Nxt blockchain.” Ardor goes on to explain how ARDR tokens were distributed, “As a reminder, ARDR tokens on the Nxt blockchain were allocated to NXT holders based on their average NXT balances during a three month period in 2016,”29 and nxter.org explains the IGNIS airdrop, “Your NXT balance @ the snapshot block determines how much IGNIS you will get: 1 IGNIS per 2 NXT.”30
Acquiring codebase forking airdrops
Claiming these airdrops is substantially different from token standard airdrops. Acquiring the ability to transfer, sell, exchange, or otherwise dispose of these tokens is similar to some methods for acquiring chain-split coins. Bitcoin (BTC) and Bitcoin Cash (BCH) share the same DNA after the chain-split, and BTC private keys enable the token holder to “acquire” BCH by importing those same keys into a new Bitcoin Cash wallet. Token holders can use the same method to claim ARDR and IGNIS tokens described above. For example, a user needs to download the new ARDR wallet and import the private key to access the new tokens. When a user imports private keys, it does not produce a transaction ID similar to the way splitting coins provides a transaction(s) to complete the spitting process. In some ways, this also has similarities to adding a custom OMG token in the ETH wallet example and the distribution of token standard airdrops. Therefore, acquiring the ability and manifesting dominion and control could come from the act of successfully importing keys or arguably selling the tokens as referenced the OMG example.
Conclusion: D&C of airdrops
The dominion and control of airdrops depend on the type of airdrop. Prospective token holders always engage in some kind of active participation to qualify for giveaways; therefore, they have “acquired” the ability to transfer, sell, exchange, or otherwise dispose of the tokens before the giveaway completes. There are two kinds of snapshot airdrops, “token standards” and “codebase forking,” and dominion and control look entirely different for both of these. For example, ETH tokens like OMG are akin to free samples where dominion and control are not always clear but can manifest upon the sale of the items. Dominion and control of ARDR tokens, on the other hand, could be similar to ETH token example, but could potentially take place upon successfully importing private keys into the new wallet.
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