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As filed with the U.S. Securities and Exchange Commission on August 19, 2019.

Registration No.

                

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM F-1

 

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

INX LIMITED

(Exact name of registrant as specified in its charter)

 

Gibraltar

 

6200

 

Not Applicable

(State or other jurisdiction of

 

(Primary Standard Industrial

 

(I.R.S.

Employer

incorporation or organization)

 

Classification Code Number)

 

Identification No.)

 

57/63 Line Wall Road

Gibraltar, GX11 1AA

Gibraltar

Tel: +350 200 79000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Puglisi & Associates

850 Library Avenue, Suite 204

Newark, Delaware

+1 302 738 6680

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Copies to:

 

Mark S.

Selinger, Esq.
Gary Emmanuel, Esq.
McDermott Will & Emery LLP


340 Madison Avenue


New York, NY 10173


+1 212 547 5400

 

Yuval Horn, Adv.

Roy Ribon, Adv.

Horn & Co.

Law Offices

Amot Investments Tower

2 Weizmann Street, 24th Floor

Tel Aviv 6423902, Israel

+972 3 637 8200

 

Aaron Payas, CFA


Andrew Montegriffo

Hassans International Law Firm

57/63 Line Wall Road

P.O. Box 199

Gibraltar GX11 1AA

+350 200 79000

 

Approximate date of commencement of proposed sale to the public:

As soon as practicable after this registration statement is declared effective.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ☒

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

 

Emerging growth company ☒

 

If an emerging growth company that prepares its financial statements in accordance with U.S.

GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☒

 

 

 

 

CALCULATION OF REGISTRATION FEE

 

Title of each class of securities to be registered Proposed maximum
aggregate offering
price(2)
  Amount of
 registration fee(3)
 
INX Token (1) $130,000,000  $15,756 

 

(1)

Described more fully on page 95.

 

(2)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended.

 

(3)

Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine.

 

 

 

 

 

The information in this preliminary prospectus is not complete and may be changed.

We may not sell these securities until the Securities and Exchange Commission has declared this registration statement effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state or jurisdiction where such offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS

SUBJECT TO COMPLETION

DATED          , 2019

 

INX LIMITED

 

 

130,000,000 INX Tokens

 

This is our initial public offering.

We are offering 130,000,000 INX Tokens, (the “INX Tokens” or “Tokens”). Each INX Token (including fractions of INX Tokens) will entitle its holder to an annual pro rata distribution of 40% of the Company’s net cash flow from operating activities, excluding any cash proceeds from an initial sale by the Company of an INX Token (“Adjusted Operating Cash Flow”).

The distribution will be based on the Company’s cumulative Adjusted Operating Cash Flow net of cash flows which have already formed a basis for a prior distribution, calculated as of December 31 of each year. The distribution is payable on an annual basis commencing on April 30, 2021, and may thereafter be calculated and paid on an annual or quarterly basis, subject to the board’s discretion.

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The pro rata distribution of the adjusted net cash flow is not self-executing and requires that our board of directors approve the Company’s financial statements and calculate such distribution in good faith.

In addition, the INX Token may be used as a form of payment for transaction fees on the INX Securities trading platform, our proposed platform for the trading of security tokens, and INX Tokens are entitled to, at a minimum, a 10% discount as compared to other forms of payment.

See “Description of INX Tokens.”

 

We intend to offer record holders of INX Tokens promotional discounts on transaction fees on the INX Digital trading platform. However, such discounts are promotional and not a right associated with ownership of the INX Token. INX Tokens may not be used as payment for transaction fees on the INX Digital trading platform. We do not currently accept INX Tokens as payment for our services and, until the INX Securities trading platform becomes operational, purchasers of INX Tokens will have no guarantee that their INX Tokens can be used as payment for any of our services.

Further, there is currently significant uncertainty regarding the application of federal and state laws and regulations to the trading of security tokens, including regulations governing market intermediaries, and this uncertainty may cause significant delay or may prevent us from developing our INX Securities trading platform and utilizing the INX Token as currently envisioned.

 

There is currently no public market for the INX Token and no guarantee can be provided whether such a market will be established.

U.S. persons may only trade INX Tokens on a registered securities exchange or alternative trading system (“ATS”) that has accepted the INX Tokens for trading or quotation. As of the date of this prospectus, no such exchange or ATS exists.

As a result, purchasers in this offering, and subsequent purchasers of INX Tokens, will likely be limited in their ability to engage in secondary trading of INX Tokens.

 

The minimum investment amount to participate in the offering is One Thousand Dollars ($1,000). We expect an initial public offering price of $      per Token. The initial public offering price was arbitrarily determined by our Board of Directors based on market conditions at the time of pricing.

Payment for INX Tokens will be accepted in U.S. Dollars. After the Company meets the minimum offering requirement (as described below), payment for INX Tokens will also be accepted in Bitcoin (“BTC”) and Ether (“ETH”).

BTC/USD and ETH/USD exchange rates will be determined by Brave New Coin’s Bitcoin Liquid Index (BLX) and Ethereum Liquid Index (ELX), respectively, as of 12:00 a.m. (UTC) on the date a purchaser has submitted an executed INX Token Purchase Agreement.

 

We will not complete the sale of any INX Tokens unless we raise gross offering proceeds of $5,000,000 from this offering (in U.S.

Form F-1 Inx Ltd

Dollars) within one year from the date of this prospectus, which we refer to as the minimum offering requirement. See “Plan of Distribution.” Pending satisfaction of this condition, all subscription payments will be promptly transmitted to Metropolitan Commercial Bank, which has agreed in writing to hold all such funds in escrow for the persons who have beneficial interests therein (the “Escrow Agent”).

To the extent that we engage broker-dealers to participate in the offer and sale of our INX Tokens, all subscription payments made to such broker-dealers will also be promptly transmitted to the Escrow Agent. If we do not meet the minimum offering requirement prior to the termination of this Offering, we will promptly return all funds held by the Escrow Agent (in U.S. Dollars) without interest or deduction.

If the Company meets the minimum offering requirement, then the Company will conduct a closing of the committed purchases and the funds held by the Escrow Agent will be made immediately available to fund the Company’s operations.

After the initial closing, sales will be conducted on a continuous basis. Any rejected subscription will have its funds returned promptly. We will continue our public offering until its termination, which will be effective upon the earliest to occur of: (i) the sale of all of the 130,000,000 INX Tokens being offered, (ii) 365 days after this registration statement is declared effective, or (iii) such shorter period as may be determined by the Company in its sole discretion.

 

Holders of INX Tokens have contractual rights determined by the INX Token Purchase Agreement.

Pursuant to the terms of the INX Token Purchase Agreement, ownership of the INX Tokens and all rights under the INX Token Purchase Agreement are contingent upon holders of INX Tokens satisfying the Company’s KYC/AML procedures, including any requirements to periodically or otherwise update information provided to the Company.

Each holder’s interest in INX Tokens will be evidenced by the INX Token Distributed Ledger.

None of the rights granted to holders of INX Tokens are defined by the INX Token source code, the underlying blockchain, or its network attributes.

 

 

 

 

The foregoing description of the INX Token Purchase Agreement is not a complete description of its terms.

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For more details about the INX Token Purchase Agreement, you should read the INX Token Purchase Agreement, which is attached as Exhibit 4.1 hereto, and is incorporated herein by reference.

 

During the offering, we will offer for sale INX Tokens in fractional divisions up to five decimal places (0.00001); sales that would otherwise result in fractional divisions of more than five decimal places will be rounded down to five decimal places.

After the offering, INX Tokens may be purchased and sold in fractional divisions up to eighteen decimal places (0.000000000000000001), which is the technical limit for ERC20 compliant tokens.

 

In their report dated August 19, 2019, our independent auditors stated that our financial statements for the period ended December 31, 2018 were prepared assuming that we would continue as a going concern and they expressed substantial doubt about our ability to continue as a going concern.

 

We are an emerging growth company, as defined in the U.S.

Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and, as such, have elected to comply with certain reduced public company reporting requirements. 

 

Purchasing INX Tokens involves a high degree of risk.

See “Risk Factors” beginning on page 15 of this prospectus.

 

 

 

Per Token

 

 

Total Minimum

 

 

Total Maximum

 

Initial public offering price

 

$

      

 

 

$

5,000,000

 

 

$

 

Underwriter’s discounts and commissions(1)(2)

 

$

 

 

 

$

0

 

 

$

      

 

Net Proceeds to us (before expenses)

 

$

 

 

$

5,000,000

 

 

$

 

  

(1)

INX Tokens offered pursuant to this prospectus may be sold by our Company from time to time by our officers and directors directly to one or more purchasers.

Our officers and directors will not receive any direct or indirect compensation for sales of INX Tokens. We have entered into an agreement with A-Labs Finance and Advisory Ltd. pursuant to which A-Labs will promote this offering to non-U.S. persons only

. Subject to the completion of an offering under which the Company has raised from non-U.S. persons not less than $10,000,000, A-Labs will receive a cash payment of no less than 6.25% of the aggregate gross proceeds of INX Tokens sold to non-U.S.

persons, and as high as 10% of such gross proceeds for the initial $30 million raised from sales to non-U.S. persons.

See “Plan of Distribution — Selling Agents and Expenses”. A-Labs will also receive a payment for non-broker services in an amount of $500,000 upon the Company selling at least $10 million worth of INX Tokens to U.S.

persons. In addition, we reserve the right to engage broker-dealers who are FINRA members to participate in the offer and sale of our INX Tokens and to pay to such broker-dealers cash commissions of up to 7% of the gross proceeds from the sales of INX Tokens placed by them. Please refer to the section entitled “Plan of Distribution” for additional information.

 

(2)

For purposes of this calculation, we have assumed that (i) 100% of the INX Tokens sold in this offering will be sold to non-U.S. persons, which would entitle A-Labs to its contingent cash payment based on 100% of the gross proceeds received by us in this offering, and (ii) no other broker-dealers participate in this offering.

 

None of the United States Securities and Exchange Commission, the Gibraltar Financial Services Commission, or any state securities commission or other jurisdiction has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus.

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Any representation to the contrary is a criminal offense. 

 

We expect to deliver the INX Tokens to the purchasers in this offering commencing on or about       , 2019.

 

The date of this prospectus is      , 2019.

 

 

 

 

TABLE OF CONTENTS

 

 

i

 

You should rely only on the information contained in this prospectus and any related free-writing prospectus that we authorize to be distributed to you.

We have not authorized any person, including any underwriter, to provide you with information different from that contained in this prospectus or any related free-writing prospectus that we authorize to be distributed to you.

This prospectus is not an offer to sell, nor is it seeking an offer to buy, the INX Tokens in any state or jurisdiction where such offer or sale is not permitted. The information in this prospectus speaks only as of the date of this prospectus unless the information specifically indicates that another date applies, regardless of the time of delivery of this prospectus or of any sale of the INX Tokens offered hereby.

Our business, financial condition, results of operations, and prospects may have changed since that date. We do not take any responsibility for, nor do we provide any assurance as to the reliability of, any information other than the information in this prospectus and any free writing prospectus prepared by us or on our behalf. Neither the delivery of this prospectus nor the sale of INX Tokens means that information contained in this prospectus is correct after the date of this prospectus.

 

The INX Tokens we are offering through this prospectus are suitable only as a long-term investment for persons of adequate financial means and who have no need for liquidity in this investment.

Because currently there is no public market for our tokens, you will have difficulty selling your token

s. Investors in the United States are directed to the special suitability standards listed in the “Suitability Standards” section.

 

You may lose all monies that you spend purchasing INX Tokens.

If you are uncertain as to our business and operations or you are not prepared to lose all monies that you spend purchasing INX Tokens, we strongly urge you not to purchase any INX Tokens.

We recommend you consult legal, financial, tax and other professional advisors or experts for further guidance before participating in the offering of our INX Token as further detailed in this prospectus.

 

We do not recommend that you purchase INX Tokens unless you have prior experience with cryptographic tokens, blockchain-based software and distributed ledger technology and unless you have received independent professional advice.

 

Those selling INX Tokens on our behalf and participating broker-dealers and registered investment advisors recommending the purchase of INX Tokens in this offering have the responsibility to make every reasonable effort to determine that your purchase of tokens in this offering is a suitable and appropriate investment for you based on information provided by you regarding your financial situation and investment objectives.

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In making this determination, these persons have the responsibility to ascertain that you meet the minimum income and net worth standards set forth under the “Suitability Standards” section of this prospectus.

 

Market data and certain industry data and forecasts used throughout this prospectus were obtained from sources we believe to be reliable, including market research databases, publicly available information, reports of governmental agencies, and industry publications and surveys.

We have relied on certain data from third party sources, including internal surveys, industry forecasts, and market research, which we believe to be reliable based on our management’s knowledge of the industry.

While we are not aware of any misstatements regarding the industry data presented in this prospectus, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” and elsewhere in this prospectus.

 

Our financial statements are prepared and presented in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB.

Our historical results do not necessarily indicate our expected results for any future periods.

 

Certain figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

 

Unless derived from our financial statements or otherwise noted, the terms “dollar,” “U.S. dollar,” “US$,” “USD,” and “$” refer to U.S.

dollars, the lawful currency of the United States.

 

ii

 

PROSPECTUS SUMMARY

 

This is only a summary of the prospectus and does not contain or summarize all of the information contained in this prospectus which is material and/or which may be important to you. You should read this entire prospectus, including “Risk Factors,” before making an investment decision about the INX Tokens.

Definitions used in this prospectus can be found in the section entitled “Glossary of Defined Terms”. Unless otherwise stated in this prospectus, references to:

 

“Coin” refers to blockchain assets, coins, and tokens, and are often used interchangeably.

In some contexts, coins may be used to refer to cryptocurrencies, a category of blockchain assets. See Blockchain Asset.

 

 

 

 

“Companies Act” refers to Gibraltar Companies Act 2014.

 

“Cryptocurrency” refers to a subset of blockchain assets which is a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value.

Also known as digital currency or virtual currency, a “cryptocurrency,” as the term is used in this prospectus, is not a “security” as provided in the Securities Act of 1933;

 

 

“INX Digital” refers to INX Digital, Inc., a Delaware corporation, which we intend to register as a money transmitter to operate a trading platform for cryptocurrencies;

 

 

“INX Securities” refers to an order book platform with a matching engine solution for the trading of security tokens which we currently intend to register as an alternative trading system to be operated by INX Services;

 

 

 

 

“INX Services” refer to INX Services, Inc., which we intend to register as a broker-dealer;

 

 

 

 

“INX Tokens,” “Tokens” or “our Tokens” refer to INX Tokens, an ERC20 blockchain asset that is programmed using a smart contract that is compatible with the Ethereum blockchain, and the rights of the INX Token holder, which are contractual rights set forth in the INX Token Purchase Agreement, as more fully described in the section titled “Description of INX Tokens” at page 95;

 

 

 

 

“INX Trading Solutions” means the business conducted by the Company in the United States, which includes the INX Digital trading platform, the INX Securities trading platform, the broker services  to be provided by INX Services and other related business activities;

 

 

“Security Token” refer to a subset of blockchain assets that falls within the definition of a “security” as provided in the Securities Act of 1933;

 

 

“Trades” refer to changes in ownership of a blockchain asset that are not a transfer of a blockchain asset from one digital wallet to another digital wallet, and therefore are not recorded on a blockchain ledger, but are recorded on a private and centralized database;

 

 

“Transaction Fees” refer to fees that are charged

for the execution of a trade that occurs on an INX Trading Solutions trading platform; provided, however, that “transaction fees” do not include deposit fees, withdrawal fees or other fees that may be charged for other services;

 

 

“Transfers” refer to transfers of blockchain assets from one digital wallet to another digital wallet as recorded on a blockchain ledger;

 

 

“Transfer Fees” refer to fees that are charged blockchain network participants when a transfer is recorded on the blockchain; and

 

 

“we,” “us,” “Company,” “our company” or “INX” refer to INX Limited and its wholly owned subsidiaries;

 

Overview

We are developing a regulated solution for trading blockchain assets (“INX Trading Solutions”) that will initially include a cryptocurrency trading platform operated by INX Digital, Inc., our wholly-owned subsidiary (“INX Digital”), for which we plan to obtain money transmitter licenses or otherwise qualify to operate in 8 US states by the end of 2019, with the intention of being licensed or otherwise qualified to operate in most US states by the end of 2020.

We also presently intend to establish an alternative trading system (“ATS”) for security tokens (“INX Securities”) to be operated by INX Services, Inc., our wholly-owned subsidiary (“INX Services”), which we plan to register as a licensed broker-dealer. However, there is currently significant uncertainty regarding the application of federal and state laws and regulations to the trading of security tokens, including regulations governing market intermediaries, and this uncertainty may cause significant delay or may prevent us from developing our INX Securities trading platform as currently envisioned.

Prior to the establishment of INX Securities as an ATS, INX Services may operate exclusively as an introducing broker with an order management system and to route security token order flow to one or more third party alternative trading systems.

 

Our vision is to establish two trading platforms and a security token that provide regulatory clarity to the blockchain asset industry.

We plan to achieve this by: (1) differentiating between security and non-security blockchain asset classes and providing trading opportunities for each class; (2) obtaining appropriate regulatory licenses and approvals, including money transmitter licenses, a U.S. broker-dealer license and subsequent registration as an ATS; (3) issuing our security token, the INX Token, and maintaining the INX Registry, which reflects a real time list of INX Token holders; (4) requiring that all INX Token holders comply with KYC/AML procedures; and (5) granting certain rights and benefits to the holders of INX Tokens.

 

When fully operational, we expect to offer professional traders and institutional investors trading platforms with established practices common in other regulated financial services markets, such as customary trading, clearing, and settlement procedures, regulatory compliance, capital and liquidity reserves and operational transparency.

 

1

 

 

In the future, we intend to establish a platform for the trading of derivatives such as futures, options and swaps.

We have taken no steps towards the establishment of such a platform, which will require the development of technological solutions as well as federal and state regulatory approvals; accordingly, there is no assurance that such a trading platform will ever be developed.

We also intend that our subsidiary in Gibraltar will apply to the Gibraltar Financial Services Commission for licenses under the Financial Services (Markets in Financial Instruments) Act 2018 and the Financial Services (Distributed Ledger Technology Providers) Regulations 2017 for our European-based operations.

 

INX Trading Solutions envisions that blockchain assets traded on our trading platforms will be transferred to a digital wallet held by one of our custodians, which transfer is recorded on the blockchain ledger that underlies such blockchain asset.

Once a blockchain asset is deposited with our custodian, none of the trading transactions performed on our trading platforms are recorded on a blockchain ledger. Trades on our trading platforms are recorded only on our internal centralized servers, and they are then reflected in each customer’s respective account. A transfer of a blockchain asset is recorded on its underlying blockchain ledger when the owner of the blockchain asset wishes to withdraw the blockchain asset from their account.

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In this event, the blockchain asset is transferred from our respective custodian’s digital wallet to the customer’s private digital wallet.

 

The architectures for the INX Digital and INX Securities trading platforms are based on a sequential processing and storage, meaning that transactions can be processed only one after the other and not in parallel.

In order to facilitate liquidity and support a vibrant trading market on our trading platforms, we intend to offer incentives to attract high volume traders and establish strategic partnerships with market makers. We also envision that our trading platforms will enable trading via web portal and application programming interface (“API”) solutions. As we further develop our trading platforms, broker-dealers or other appropriately regulated third parties may route their customers’ trades to our trading platforms using API.

 

Further, we intend to provide additional comfort to our customers with respect to the financial stability of the Company by allocating 75% of the net proceeds from this offering in excess of $25 million to be available to cover customer and Company losses, if any, that result from cybersecurity breaches or theft, errors in execution of the trading platform or its technology, and counterparty defaults, including instances where counterparties lack sufficient collateral to cover losses.

We refer to this amount as our “Cash Fund.”

 

We have also created the INX Token, which is offered pursuant to this prospectus. The INX Token is an ERC20 blockchain asset that is programmed using a smart contract that is compatible with the Ethereum blockchain. After the INX Securities trading platform becomes operational, holders of INX Tokens will be able to use the INX Token to pay transaction fees on the INX Securities trading platform.

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When paying for transaction fees, INX Tokens will be entitled to, at a minimum, a 10% discount to other forms of payment. See “Description of INX Tokens - Uses of the INX Token on the INX Platforms.” We intend to offer record holders of INX Tokens promotional discounts on transaction fees on the INX Digital trading platform.

However, such discounts are promotional and not a right associated with ownership of the INX Token. INX Tokens may not be used as payment for transaction fees on the INX Digital trading platform.

We do not currently accept INX Tokens as payment for our services and, until the INX Securities trading platform becomes operational, purchasers of INX Tokens will have no guarantee that their INX Tokens can be used as payment for any of our services.

In addition, holders of INX Tokens will be entitled to receive an annual pro rata distribution of 40% of the Adjusted Operating Cash Flow.

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The distribution will be based on the Company’s cumulative Adjusted Operating Cash Flow net of cash flows which have already formed a basis for a prior distribution, calculated as of December 31 of each year. The distribution will be payable on an annual basis commencing on April 30, 2021, and may thereafter be calculated and paid on an annual or quarterly basis, subject to the board’s discretion.

See “Description of INX Tokens - Participation Right in Adjusted Operating Cash Flow.”

 

In order to participate in this offering, a purchaser must be duly identified through the Company’s KYC/AML procedures and such purchaser must provide the Company with a compatible digital wallet address to receive INX Tokens. In order to verify that INX Tokens are transferred between KYC/AML-vetted holders, transfers of INX Tokens will be executed by the INX Token smart contract under conditional permission that the wallet addresses of both the sender and receiver of INX Tokens are listed on a database stored on the data section of the INX Token smart contract (the “Whitelist Database”).

If either the sender or receiver wallet address is not listed in the Whitelist Database, the smart contract rejects the transfer and the INX Token Distributed Ledger is not updated.

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The transferor of INX Tokens will be responsible for payment of the transfer fees on the Ethereum blockchain. For example, in 2018, Ethereum average daily transfer fees varied between $0.15 and $5.528.

In 2019, Ethereum average daily transfer fees varied between $0.05 and $0.1235. The average time to record transfers (new blocks on the Ethereum blockchain) has been 3 minutes. For additional information regarding that transfer of INX Tokens, see “Description of INX Tokens - Holding and Transferring INX Tokens”. 

 

 Corporate Information and Structure of INX

 

We are a Gibraltar private company limited by shares, incorporated on November 27, 2017.

Approximately twenty-nine percent (29%) of our issued share capital is held by Triple-V (1999) Ltd, an entity wholly owned by Shy Datika, one of our founders, our controlling shareholder and President (see – “Principal Shareholders”).

The balance of our issued share capital is held by our employees, lenders, service providers and investors. We plan to have the following wholly-owned subsidiaries:

 

 

INX Digital, Inc., a Delaware corporation, which we intend to register as a money transmitter to operate a trading platform for cryptocurrencies;

 

 

INX Services, Inc., a Delaware corporation, which we intend to register as a broker-dealer to act as an introducing broker and subsequently to operate an alternative trading system for security tokens;

 

2

 

 

 

INX Solutions Limited., incorporated in Gibraltar as a private company limited by shares (“INX Solutions”), through which we intend to offer the Company’s services and products to the European market.

We intend to apply to the Gibraltar Financial Services Commission for licenses under the Financial Services (Markets in Financial Instruments) Act 2018 and the Financial Services (Distributed Ledger Technology Providers) Regulations 2017 for our European-based operations.

 

 

 

INX Limited’s registered office is located at 57/63 Line Wall Road, Gibraltar, GX11 1AA, Gibraltar, and its telephone number is +350 200 79000.

INX Limited also has an office located in Israel, where a majority of its senior officers are currently based. After the INX Digital trading platform becomes fully operational, INX Limited intends to relocate its principal office to the United States.

 

Industry Overview

 

Background & Current Market  

 

Blockchain Technology and Blockchain Assets

 

Blockchain technology is a digital record or ledger of transaction data that is permanently recorded in files called “blocks.” Each blockchain is founded upon software source code that establishes and governs its cryptographic system for verifying transactions.

 

In traditional blockchain networks, copies of the blockchain ledger are stored in a decentralized manner on computers across a peer-to-peer network.

Users of the blockchain network maintain a copy of the ledger with all copies of the ledger synchronized through a consensus algorithm. Protocols included in the source code govern the rules, operations and communications of the underlying blockchain network, including the validation of new blocks that contain an updated ledger reflecting new transactions.

 

This lack of a single point of data collection is believed to enhance the security of traditional blockchain networks and blockchain assets.

Nonetheless, blockchain assets and blockchain trading platforms remain susceptible to security breaches and cybercrime. Since 2011, more than $1.7 billion has been publicly reported stolen from cryptocurrency exchanges and investors.

For example, in January 2018, about $500 million worth of blockchain assets were stolen from a major Japanese trading platform1