LXDX Cryptocurrency Exchange To Issue Stock Through STO
LXDX, a new cryptocurrency exchange will be going public soon and issuing its shares through a security token offering (STO) instead of the traditional initial public offering (IPO) or initial coin offering (ICO).
Founded by SpaceX employee, Joshua Greenwald, LXDX will be joining the pioneer league of companies issuing their stocks through STOs. With this, investors would be able to buy their cryptocurrency tokens which will in turn represent ownership shares in the company.
Security token offerings are the new and improved kind of initial coin offering. These are designed to help blockchain companies raise funds while adhering to standards set by regulatory bodies like the Securities and Exchange Commission (SEC).
ICOs were initially the tool of choice for fund raising among crypto founders and their startup companies. But the blatant abuse of ICOs and the subsequent crackdown on them, weakened investor confidence, causing people to avoid them.
STOs differ from ICOs in the sense that ICOs are utility tokens similar to your regular gift cards, coupons or reward points, while STOs are actually the “digital form” or blockchain version of IPOs. Interestingly, the SEC through its crackdown has clearly stated that many ICOs are actually STOs, courtesy of their founders’ intent as well as that of investors who purchase them with the sole intent of holding on to them until they appreciate in the future.
Seeing as this is the case, many ICO token founders are beginning to properly categorize their ICOs as STOs and are currently making efforts to comply with the SEC’s regulations.
LXDX tokens when bought will signify owning a part of the company, and investors will also have access to enjoying dividend benefits. This round of STOs will include 5 million tokens, representing just 10 percent of the company’s ownership share, and will offer investors 10 percent of the company’s gross revenue quarterly.
Each token will be sold for €1, resulting in a valuation that’ll be around $57 million at the end of this round of funding. Trading restrictions will also be in place to prevent price manipulations.
Will We See a Token Valued at $1 Million soon?
LXDX COO and co-founder, Will Roman, thinks that the world might on the verge of witnessing a token valued at a million dollars. According to him,
“You will wake up one day, on a day not so different and not so far from this one, and there will be tens of millions tokens for trade. You’ll login to your IB, your TD Ameritrade account and instead of 4,000 or so equities to select from, you’ll be in a gateway to direct investment in a truly inconceivable number of opportunities.”
he said,“Of course, there will be small businesses, there’s already 5 million of those in the US alone. But, there will also be tech startups, bonds, art collections, real estate projects, usage rights, royalties, and, yes, still funds that aggregate and index all of this coming chaos.”
“As blockchain technology proliferates, we expect to see increased tokenization of tangible assets like real estate, commodities, and even art. The million token future is just around the corner,” added CEO Joshua Greenwald in a press release. “We are excited to provide our community a chance to experience the benefits of a true security token.”
Investors interested in the token would have to get accredited from Malta’s cryptocurrency regulation board before they can invest though.
This new exchange intends to commence user signups in the middle of November in preparation for its December 2018 launch. It hopes to attract the attention of institutional investors too who are currently looking to get into the blockchain space.
The exchange’s features will include crypto derivatives that are only unique to the platform as well as avoid socialized losses tokens. Roman says,
“We don’t like auto-deleveraging and we don’t like socialized losses,” Roman said. “We’re going about that differently than others in the crypto space; we don’t do auto liquidations.”
He goes on to state that the exchange will differentiate itself through its radical transparency processes, thus eliminating allegations of possible wash trading, and market manipulation among other shady processes, commonly used in a few crypto exchanges.
“With respect to ethos, we operate under radical transparency and operate according to all applicable regulations. We don’t secretly trade on our platform or sell your order flows to high frequency shops. We take a ‘seriously, don’t even try it’ attitude with respect to wash trading, pumps, and other market abuses.”
He also says the platform will offer a unique solution that has eluded most crypto exchanges –that’s 100 percent uptime regardless of market volatility or trading volume.
“On the tech side, we do everything on our, custom-tuned hardware in our own data centers. Coded from scratch in C++, best possible NIC cards and servers you can buy,” he said. “We push orders through our entire network in single digit microseconds.”
Regarding security, he says
“Where possible,” every LXDX wallet is secured by multi-signature technology, geographic distribution of private keys, layers of redundancy to prevent unauthorized withdrawals. LXDX’s core systems are housed in a company-run data center, not the cloud, and he said that the firm would “run our own clusters to protect against double spends and eclipse attacks.”
While the company did get funding from private investors like Dymon Asia Venture Capital Fund and Arianna Simpson of Autonomous Partners in the first round of funding, the company felt it needed a second round of funding to be able to compete in the crypto exchange market, and put it on the fast track to becoming a major exchange in the market. This is why they issued their STO.
“The space in which we operate is competitive, and given all the moving pieces, both technically and regulatory, expensive. We are not looking to be another exchange to trade crypto assets; we’re here to win,” Roman said in an emailed statement. “We will be the crypto exchange on which to trade and to do so requires the appropriate capitalization.”