Simple Agreements for Future Tokens (SAFTs): Delivery Conditions and Termination for Delayed Token Issuance
Reviewing delivery timing and conditions, grounds for termination, and enforceability
A Simple Agreement for Future Tokens (SAFT) is a contract under which an investor pays first and receives tokens to be issued in the future. If the token generation event (TGE) is delayed, whether the investment can be recovered depends on the delivery timing, conditions, and termination grounds set out in the agreement.
Responding to a delayed issuance requires reviewing the interpretation of the contract wording, the requirements for termination and restitution, the securities analysis, and cross-border dispute resolution procedures together. This article summarizes the key points that affect delivery conditions and refund claims.
1. Structure of a SAFT and the Investor's Rights
Under a SAFT, the investor pays first and, once the project later issues tokens, receives a set quantity or proportion of those tokens. What the investor receives is often not equity but a contractual right to demand future delivery of tokens.
The investor's rights vary significantly depending on the wording of the agreement. The first step is to confirm whether the party obligated to deliver is an overseas foundation or a Korean developer.
The lock-up and vesting conditions after issuance and any wording on exchange listings should also be reviewed. Because listings are often defined as matters the project does not guarantee, it may be difficult to claim a breach of contract based only on a delayed listing.
2. Interpreting Delivery Timing and Conditions
The analysis differs depending on whether delivery is tied to a specific date or to a condition such as a mainnet launch or TGE. If there is only a condition and no deadline, the key issue becomes what happens if the condition is never fulfilled.
In a business agreement providing for the payment of tokens, the Seoul High Court held that the issuer's refusal to pay by newly invoking a condition, completion of mainnet development, that did not exist when the agreement was made constituted a refusal to perform, and that the counterparty's termination of the agreement was lawful.
This decision was a provisional injunction ruling concerning a business agreement, not an investor's SAFT case, and a re-appeal was filed. However, it is a useful reference for SAFT disputes in that the delivery timing and conditions were interpreted based on the contract wording and the circumstances of its formation.
3. Termination and Refunds for Delayed Issuance
If a delivery deadline has been set, the investor should consider whether it can demand performance within a reasonable period after the deadline passes and terminate the agreement if the issuer still fails to perform (Article 544 of the Korean Civil Act). If the issuer has clearly expressed that it will not perform, termination without such a demand may also be considered.
Once the agreement is terminated, the investor may claim return of the investment as restitution (Article 548 of the Korean Civil Act). However, if a foreign governing law applies to the agreement, the requirements and effects of termination must be determined under that law.
SAFTs often include clauses providing that only the remaining funds will be returned pro rata if the project is discontinued, or clauses stating that payments are non-refundable. The validity and scope of such clauses must be reviewed first to assess whether a refund claim is worthwhile.
4. Securities Analysis and Regulatory Risk
Korea's Financial Services Commission has stated the principle that the Financial Investment Services and Capital Markets Act applies if the substance of a right is a security, even if it is issued in digital form. The analysis is based on the substance of the right, not its name or form, and Korean securities regulations may apply if an offering is solicited to Korean investors, even if the tokens are issued overseas.
Amendments to the Electronic Securities Act and the Capital Markets Act introducing security tokens passed the National Assembly on January 15, 2026, and take effect one year after promulgation. Whether a SAFT constitutes a security must be determined based on the rights under each individual agreement and cannot be concluded uniformly.
The securities analysis may also affect the basis for the investor's refund claim and the scope of the issuer's liability. If there were problems with the sales method or explanatory materials, these should be reviewed separately from the contractual claim.
| Clause | Key Review Points |
|---|---|
| Delivery obligation | Contracting party, delivery quantity, and lock-up conditions |
| Delivery timing | Fixed deadline or condition; treatment if the condition is not fulfilled |
| Termination and refund | Grounds for termination; scope and calculation of refunds |
| Regulation | Substance of the rights and securities status; method of solicitation to Korean investors |
| Dispute resolution | Governing law and arbitration; enforceable assets |
5. Materials to Secure After a Delayed Issuance
Preserve the agreement and ancillary terms, the white paper and roadmap, explanatory materials received at the time of investment, remittance records, and wallet addresses. Schedule change announcements and community notices should also be saved with their dates visible.
Confirm the issuer's location, the governing law of the agreement, any arbitration clause, and whether the issuer has assets or affiliates in Korea. If only an overseas foundation is a party to the agreement, enforcement may be difficult even after obtaining a judgment or award.
If several investors signed the same agreement, a joint response may be considered. However, the timing of investment and contract terms may differ, so each investor's agreement should be compared first.
6. Implications for Businesses
The delivery obligation under a token purchase agreement is interpreted based on the contract wording and the circumstances of its formation. For agreements in which delivery timing is tied to a condition, the treatment of an unfulfilled condition and the termination grounds must be checked to assess whether a refund claim is possible.
The securities analysis, governing law, and enforceable assets directly affect the method and practical value of a claim. Investors should preserve the agreement, explanatory materials, and remittance records, and review contractual claims and regulatory issues together.
Related Laws and References
Korea Law Information Center — Civil Act Article 544 (Korean)
