How Does the Transition from a Private Sale to a Public Launch Affect Classification?

The transition from a private sale (often restricted to accredited investors under an exemption like Reg D) to a public launch significantly increases regulatory scrutiny. A private sale may be exempt from registration, but a public launch of the same token must either be registered or rely on a different exemption.

The public marketing and broader distribution of the token are key factors that regulators use to assess the "expectation of profit" and the need for investor protection.