Cryptocurrency company, Blackmoon, is reportedly offering tokenized shares of Xiaomi, the world’s fourth-largest smartphone manufacturer, to investors as the latter offers an Initial Public Offering (IPO) on the Hong Kong Stock Exchange (HKEX).
Xiaomi’s Tokenized Shares
Blackmoon, a Cyprus-based crypto company, sells its tokens to investors and aims to use the proceeds for investing in the IPOs of major corporations worldwide. A South China Morning Post report on July 3, 2018, describes Blackmoon as a “bridge between the crypto universe and the traditional investment market.” Blackmoon raised $30 million during its own Initial Coin Offering (ICO) and offers other questionable ETF-backed tokens on its showcase page.
With regards to the enterprising IPO-backed token sale, Blackmoon offers the digital equivalent of Xiaomi’s shares on a dollar-for-dollar basis. Investors can use bitcoin (BTC), ether (ETH), or litecoin (LTC) to subscribe to the smartphone giant’s $4.7 billion IPO. Trading of shares commences on July 9, 2018, on the HKEX. In a move that presumably prevents a pump and dump, Blackmoon has instilled a “lock-in period” of 93 days, approximately three months, after listing of Xiaomi’s shares.
Conceptually, the unregulated Blackmoon token is similar to a derivative, which is a feature of the traditional finance market that offers global investors a chance to purchase an underlying security, equity, or bond.
Smartphone Giant Denies Connections
Blackmoon will pay its investors a profit if the Xiaomi shares perform well. In case of an underperformance, the tokens will be marked down from their base price. The company stated that token holders can redeem the tokens once a month, during which Blackmoon will sell the actual Xiaomi shares on the HKEX. Currently, the company will pay out the profits in an equivalent amount of digital currencies, but it claims to be working towards a fiat option.
Meanwhile, Xiaomi has denied all connections to and knowledge of the company and made it clear that any token sale is out of its scope of operation. Xiaomi enjoyed an overwhelming IPO that saw its shares oversubscribed by 8.5 times. Founded in 2010, the company is worth a mammoth $54 billion after the public offering.
Blackmoon Restricts Chinese Investors
Blackmoon COO, Sergey Vasin, revealed that a majority of the token buyers were from France, Germany, and the U.K. However, no figure on the number of tokens sold or total amount is known at the time of writing.
Ironically, the Xiaomi token was largely available for investors across the globe, except for the Chinese and Hong Kong markets. Blackmoon cited the risk of regulatory concerns and money laundering as the reason for these restrictions.