Israeli cryptocurrency company INX Crypto and Derivatives will be the first company in the sector to submit a prospectus for an initial coin offering (ICO) with approval from the US Securities and Exchange Commission (SEC). The offering will be regarded as a security. In contrast to earlier ICOs, which were conducted without regulatory approval and called ICOs, INX's ICO will be classified as an IPO, because it involves a security. INX is registered in Gibraltar, but it was founded, operates, and is managed from Israel. The company plans to raise $130 million in an offering of INX Tokens. The minimum for an offering, below which the offering will not take place, is $5 million. At this stage, the price of the currency in the offering is still unknown. The SEC, which previously ruled that any ICO would be considered an offering of a security, opened investigations and filed lawsuits against companies that made offerings without the required approvals.
INX was founded in 2017. Triple-V, owned by Shy Datika, holds 29.4% of INX's share capital. Dakita is cofounder and president of INX. He sold his foreign currency company, ILSB, to Leader Capital Markets in 2012 for NIS 22 million in cash and shares in the first stage (for 75% of the company). Datika was then appointed VP business development at Leader, and resigned the position 18 months later. Four years after the acquisition, Leader Capital Markets had to write off NIS 6 million of ILSB's value for goodwill, following a substantial drop in the volume of the company's activity.
In the list of risks for an investment, INX states that its success depends on Datika's continuing to work at the company, because he has "extensive knowledge and connections in the industry," and that the company's reputation in the blockchain industry is a direct result of Datika's efforts to achieve credibility in the industry. The prospectus indicates that everyone holding the company's digital currency will be entitled to receive his relative share of 40% of the cash flow from INX regular activity. The company will also offering holders of the currency a discount on transactions using its platform.
Great detail about the use of the ICO proceeds
INX portrays itself as a company developing a sophisticated solution for trading in blockchain assets. In the first stage, this will include a platform for trading in digital currencies developed by its subsidiary. "Our vision is to develop two trading and digital currency platforms that will provide regulatory certainty for the blockchain assets industry, " the prospectus states. The way the company plans to do this is through an offering of its digital currency, among other things, and by maintaining real-time records of those holding it. The company is also marking professional investment institutions as a target group, and wants to offer them a platform supervised by the regulator that includes the usual practices in other supervised markets, such as maintaining liquid reserves, operational transparency, etc. In the future, INX plans to create a platform for trading in derivatives, such as options and futures.
INX goes into great detail about its plans for using the proceeds from its offering. If the company succeeds in raising the $130 million that it is seeking, it will use $8 million for R&D, $10.3 million for management and general expenses, $3 million for marketing and sales, $3 million for regulation and legal expenses, and $3.6 million for customer service and operations. If the $5 million minimum amount is raised, the company will spend $819,000 on R&D, $2.3 million on management and general expenses, $325,000 on marketing and sales, and $1.1 million on regulation and legal expenses.
Published by Globes, Israel business news - en.globes.co.il - on August 20, 2019
© Copyright of Globes Publisher Itonut (1983) Ltd. 2019