Unbanked and unincorporated?

We've established a company without a bank account as a possibility (and a legal one—there's no specific requirement in many jurisdictions for a legal entity to have a bank account). But what about an organization without a legal structure, or with a highly unconventional one?

Anyone considering investing in an organization or asset without a legal entity should be very careful, because the assumption is that your personal assets are at risk. In general, people use entities in order to protect their personal assets and attain some sort of organizational or tax benefit.

Without an entity, an organization may not have limited liability, and the law may choose to treat the owners as partners. As far as liability is concerned, partnership without an entity is just about the worst treatment you can ask for. This holds true in both common law jurisdictions (which have LLCs, LLPs, corporations, trusts, foundations, and other forms) and in civil law jurisdictions (which have analogous forms such as the Luxembourgish SARL, the German GmbH, and the French SA).

Under US law, members of a partnership can be jointly and severally liable for transgressions committed by the partnership. People involved in a crypto entity, even a little bit, don't have the benefit of a corporation or other entity that could take the hit and fall over dead if someone else had a claim against it.

Limited liability is just that—your liability is limited to your investment and organizations usually distinguish between people who are passively involved in an entity (limited partners or shareholders) and those who are actively involved (general partners or officers).

Limited liability doesn't protect members of an organization against criminal liability. If the officer of a corporation commits fraud either against a shareholder or against the public, limited liability doesn't protect them.

Given that extreme caution should be exercised in considering whether the operation of any crypto project is legal, regulatory action so far has mainly been concerned with fraudulent raises fleecing investors rather than investors being involved in an organization that fleeced the public. This does not mean the investors are safe.

Consideration should be given to whether the management team is identifiable (for instance, can you at least look at someone's LinkedIn and confirm that they exist?), and whether the entity is identifiable (can you find the jurisdiction the company claims to be registered in so I can check that it really exists?).