INX Ltd. said it will launch its long-awaited landmark initial public offering (IPO) as soon as Monday, capping a nearly two-year journey for the startup cryptocurrency and security token exchange.

  • "It is anticipated that the offering will begin on Aug. 24, 2020, or shortly thereafter," the Gibraltar-based company said in a press release Thursday.
  • Also Thursday, U.S. Securities and Exchange Commission (SEC) posted a notice of effectiveness, officially clearing the sale.
  • As previously reported, INX has priced its 130 million tokens, which are to run on the Ethereum blockchain, at $0.90 each, totaling $117 million in gross proceeds. This was smack in the middle of the target range of $0.80 to $1.00 per token.
  • After offering expenses and fees to advisory firm A-Labs, the sale would net up to $111 million, according to INX's latest filing with the SEC.

The net proceeds would be used to:

  • Build INX Trading Solutions, a regulated exchange for cryptocurrencies, security tokens and derivatives.
  • Build a cash fund to protect the company and its customers in the event of a data breach, trading execution error or counterparty default.

The instruments on offer are a hybrid of utility and security tokens.

  • Investors could use them to pay trading fees on INX's platform.
  • The tokens would also entitle holders to a share of company profits.

INX’s sale would mark a milestone for the blockchain industry.

  • It would be the first security token offering (STO) registered with the SEC, and thus legally marketable to mom-and-pop investors.
  • Previous STOs were unregistered and limited to wealthy investors, with the issuers simply filing notices to the regulator; the initial coin offerings (ICO) of the 2017-2018 boom were conducted with little if any regard for compliance.
  • INX's sale would also be one of very few IPOs in the blockchain industry and almost certainly the largest.

It’s been a long road for the company, whose U.S. operations are led by Executive Managing Director Alan Silbert. (His brother Barry is the CEO of Digital Currency Group, the parent company of CoinDesk.)

  • INX first signaled its intent to go public with a draft registration statement submitted in January 2018.
  • The company filed its F-1 prospectus (the SEC's form for foreign issuers) almost exactly a year ago.
  • To comply with know-your-customer (KYC) regulations, INX has written a smart contract that allows only wallet addresses belonging to investors that have been vetted and put on a "whitelist" to receive the tokens.
  • TokenSoft, a registration agent that specializes in blockchain token offerings, is doing the KYC checks and maintaining the registry of investors.
  • Last month, INX hired Paz Diamant as its chief technology officer, regulatory filings show. Diamant is the former managing director of R&D and product at eToro, where he built the brokerage's crypto trading system, according to his LinkedIn profile.

UPDATE (Aug. 21, 15:00 UTC): Added sentence about notice of effectiveness from SEC.

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