Capital markets News

German regulator authorizes security token offering on Bitcoin side chain

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Today security token platform STOKR said BaFin has authorized a security token offering (STO) on the Liquid Network, a sidechain of the Bitcoin blockchain. BaFin has previously approved STOs on the Ethereum blockchain.

The latest offering is by Luxembourg game developer Exordium, which is raising €8 million ($9.4m) for its Infinite Fleet game. However, the amount available to non-professional investors is limited to less than €1 million with a minimum investment of $100. The company was co-founded by Samson Mow, the chief strategy office at Bitcoin developer Blockstream which initiated the Liquid network.

Blockstream Mining has also used the STOKR platform to issue security tokens, but those were private offerings targeted at accredited investors.

The Exordium security token is not a straight equity share in the company. Instead, all token holders combined will have the right to “20% of the Exordium Limited profit minus costs.” As we did not go through anti-money laundering procedures, we couldn’t access the prospectus to delve into the details.

Exordium also has an arrangement with Bitfinex Securities to list its token. Bitfinex Securities was set up by the Bitfinex exchange, the same one that is banned in New York. In February, the NY attorney general stated that “iFinex — the operator of Bitfinex — and Tether made false statements about the backing of the “tether” stablecoin, and about the movement of hundreds of millions of dollars between the two companies to cover up the truth about massive losses by Bitfinex.”

Since then, Bitfinex Securities has become a regulated investment exchange operating within Kazakhstan’s Astana Finance Services Authority sandbox. 

Bifinex owner Ifinex recently co-led Blockstream’s $210 million Series B funding round alongside UK investment manager Baillie Gifford which is interested in the Liquid Network for security tokens.

Meanwhile, in February, Daiwa Securities trialed a bond security token on the Liquid Network for a small sum.

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