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Yes, Regulation Crowdfunding imposes transfer restrictions on the shares issues in crowdfund offerings. Unlike a publicly traded companies (i.e. listed on Nasdaq or NYSE) the shares are offered under Regulation Crowdfunding are private (not registered with the SEC) and restricted for a period of one year. This means that you are restricted or prohibited from reselling your shares for the first year, subject to certain exception such as transfers to:
- to the company that issued the securities;
- to an accredited investor;
- to a family member;
- in connection with your death or divorce or other similar circumstance;
- to a trust controlled by you or a trust created for the benefit of a family member;
- as part of an offering registered with the SEC.
Therefore, if you have any need for liquidity (ability to sell your securities and use the money for something else) in the near future, you should not invest in crowdfund offerings. You are strongly advised to discuss with your financial advisor.
We also want to note that even after the restrict period ends and you have the right to sell your shares, there is no guarantee that a market will exist and anyone will want to acquire your shares.