A cypherpunk and chief technology officer of the Casa startup, Jameson Lopp, spoke highly of INX’s IPO, but in the community he was criticised for backing the project. It emerged that he is an adviser to INX and will receive security tokens issued on the Ethereum blockchain. Among the advisers was also a Bitcoin maximalist, an uncompromising Ethereum critic, and Blockstream’s chief strategy officer Samson Mow.
It’s a yes. pic.twitter.com/YsUoysPGF3
— Keonne Rodriguez (@keonne) August 25, 2020
Lopp stressed that his financial motivation is not a secret, and security tokens cannot be equated with ordinary altcoins that attempt to compete with Bitcoin.
He added that some Bitcoin maximalists have begun criticising not only inefficient forms of money but assets in general other than Bitcoin. He himself does not subscribe to such an approach.
Don’t conflate permissionless altcoins that try to compete with bitcoin to this, a regulated security token for a specific company.
This is a very different beast; I find it interesting because historically the most profitable businesses in the crypto ecosystem are exchanges.
— Jameson Lopp (@lopp) August 25, 2020
This has been public information for over a year and is a part of the prospectus that anyone considering investment should read.
— Jameson Lopp (@lopp) August 25, 2020
It seems somewhere along the way a certain sect of Bitcoin Maximalism branched off and became not just «anti shitty money» but «anti all assets other than bitcoin.»
— Jameson Lopp (@lopp) August 25, 2020
Bitcoin maximalist Hodlonaut was outraged by Lopp’s tweet and by his involvement in an Ethereum-based project. He suggested that Lopp would sell his security tokens to retail investors at an inflated price, since advisers bought them for $0.01 and the IPO price is $0.90.
Shilling a security token issued on ethereum. 🤔
A token he owns 250k of, that will be dumped on investors at 100x the price he got it for. 🤔🤔 https://t.co/5A0zgdyRio— hodlonaut.hodl 🌮⚡🔑 (@hodlonaut) August 25, 2020
Quite bizarre, but I don’t recommend giving them more attention and free advertisement. We’ve seen this movie a million times before and heard all the explanations. Just take note, mute and move on.
— Saifedean Ammous (@saifedean) August 26, 2020
INX founder Alan Silbert, brother of Grayscale Investments CEO Barry Silbert, noted that advisers would be unable to sell their tokens for six months, while top management would be locked up for two years.
This is like criticizing a company’s founders for getting a lower valuation due to higher risk. He is locked up anyway for 6 months, which clearly shows nobody is «dumping» right now. Senior management locked up for 2 years.
— Alan Silbert (@alansilbert) August 25, 2020
Samson Mow said that the industry needs a US security-token exchange. He expressed regret that INX’s tokens are issued on Ethereum, because “Ethereum is garbage.” But, in his words, INX could migrate to another network in the future, though regulator approval would be required.
I invested in @INXLimited sometime in mid 2018 because I think a major security token exchange in the US would be a good thing. They already started the filing with the SEC at that point based on an ERC token standard, which is unfortunate because Ethereum is garbage.
— Samson Mow (@Excellion) August 26, 2020
InX’s blockchain IPO, the issuance of security tokens, began on August 25 on the Tokensoft platform. According to Tokensoft representatives, this is the first foreign blockchain IPO in the United States in the form of an F-1, approved by the U.S. Securities and Exchange Commission (SEC).
Tokensoft Facilitates Launch of First Blockchain IPO With INX Limited https://t.co/vldT89GFWq
— Alan Silbert (@alansilbert) August 25, 2020
The private-key generation ceremony underwent an audit by Ernst & Young. INX’s security token is issued on the ERC-1404 standard with automatic freezing of advisers’ and employees’ tokens. Token holders will receive 40% of the company’s “adjusted operating income” and discounts on exchange trading fees (starting at 10%).
Custodial partners were Anchorage and BitGo.
Alan Silbert said that his team did everything the ICO projects in 2017 did not.
So all of you complained in 2017 about all the shitcoin ICOs. We did everything they didn’t. Insider lockups, audits, transparency like never seen before in the space, insurance fund, token liquidation preference, independent Board. Tweet thread later.
— Alan Silbert (@alansilbert) August 25, 2020
However, the company does not guarantee stable payouts and may prioritise funding new products or acquiring other companies. INX also did not clearly explain how exactly the “adjusted operating income” is calculated.
«no distribution will be made to INX Token holders, if at all, until the Company generates positive Adjusted Operating Cash Flows that overcome this deficit. Thus, you may not receive a pro rata distribution even in years in which we are profitable due to our historical losses»
— Frλ͎ncis ☩⚔ (bullbitcoin.com) (@francispouliot_) August 26, 2020
Seems like returns are very far from being guaranteed. Much potential for shenanigans. Incentives do not seem aligned between INX directors/shareholders and the token holders. Token holders don’t have decision making power. But I’m totally ignorant about how these things work.
— Frλ͎ncis ☩⚔ (bullbitcoin.com) (@francispouliot_) August 26, 2020
Among the features of the blockchain IPO are mandatory KYC, traceability of ERC-1404 tokens on the Ethereum blockchain, and the ability to recover a wallet via the transfer agent in case of loss of the private key.
5/ The answer to the second question is also «exactly like before». Which is why we developed the INX and Arca tokens on https://t.co/mKcrHQ6sXe — to ensure that securities being tracked on the blockchain are tracked just like they are today. This is why KYC is required. pic.twitter.com/bssCUYYDwp
— Mason & Co. (@masonic_tweets) August 25, 2020
The former executive director of the Bitcoin Foundation Bruce Fenton said that shares could only be criticised by socialists.
What Alan & team did is good. A fully registered security in the US.
Know who doesn’t like securities?
Socialists. That’s who.Don’t be a socialist. Support securities markets.
Judge each security on its merit — any instrument may be good or bad. But the structure is right. https://t.co/Qz9VF5THbM
— Bruce Fenton (@brucefenton) August 25, 2020
«Support the stock market. Do not be a socialist».
As reported, INX plans to issue 130 million tokens at $0.90.
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