Security Token Provider INX Cannot Relate to Coinbase’s SEC Woes

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  • After its suc­cess­ful reg­u­lat­ed ICO, INX now works with oth­er com­pa­nies on com­pli­ance solutions 
  • Coinbase’s claim that the SEC refus­es to cre­ate new rules is unfound­ed, INX’s deputy CEO told Blockworks 

As Coin­base con­tin­ues its dis­agree­ment with the SEC over the prop­er clas­si­fi­ca­tion of cryp­to assets, secu­ri­ty token provider INX says it has been play­ing by the rules for years. 

INX, an exchange that facil­i­tates reg­u­lat­ed secu­ri­ties tokens list­ings, was found­ed in 2017, dur­ing the height of the ini­tial coin offer­ing (ICO) boom. As the new form of crowd­fund­ing drew increased reg­u­la­to­ry scruti­ny, the com­pa­ny decid­ed to adhere to strin­gent reg­u­la­to­ry stan­dards, said Itai Avneri, deputy CEO and chief oper­at­ing officer.

“We made a strate­gic deci­sion back then that we were going to do it in the right way,” Avneri said. “While oth­ers ran away from reg­u­la­tions, we went to the front door and basi­cal­ly came to the SEC and said that we want to do a reg­u­lat­ed ICO.” 

INX was the first com­pa­ny to con­duct a tok­enized ini­tial pub­lic offer­ing under SEC approval in 2021. The plat­form raised $85 mil­lion from more than 7,000 retail investors. After the token offer­ing closed, INX list­ed the INX secu­ri­ty token for the sec­ondary mar­ket on its alter­na­tive trad­ing sys­tem, the INX Secu­ri­ties platform. 

Coinbase’s recent peti­tion to the SEC to pro­vide greater clar­i­ty around dig­i­tal asset clas­si­fi­ca­tion high­lights the same issues INX has been address­ing with reg­u­la­tors for years, Avneri said. 

The SEC alleged nine tokens (AMP, RLY, DDX, XYO, RGT, LCX, POWR, DFX and KROM) are secu­ri­ties and, as such, Coin­base can­not trade them with­out a bro­ker-deal­er license, which INX holds, Avneri said.

“[In the peti­tion, Coin­base] said that the SEC has been unwill­ing to write new rules,” Avneri said. “I’m say­ing they’re wrong because the SEC is already work­ing togeth­er with us.” 

The SEC’s lat­est com­plaint high­lights the need for com­pa­nies and projects to think crit­i­cal­ly before launch­ing tokens, Rena­ta Szko­da, chief finan­cial offi­cer of INX, said.

“It’s such a crit­i­cal moment for these projects and com­pa­nies to con­sid­er whether they would be con­sid­ered a secu­ri­ty or not, if that token is issued,” Szko­da said. 

“Unfor­tu­nate­ly, a lot of tokens got cre­at­ed and I don’t know if that con­sid­er­a­tion ever got its full deserved attention.” 

INX now works with oth­er com­pa­nies to help issue dig­i­tal secu­ri­ties and raise cap­i­tal by pro­vid­ing licens­ing, tech­nol­o­gy, mar­ket­ing, com­pli­ance ser­vices and more. Last month, INX part­nered with Truc­pal, a dig­i­tal finan­cial and tax account­ing soft­ware for the Chi­nese freight mar­ket, to launch a token offering. 

“I do want to stop and acknowl­edge how rev­o­lu­tion­ary this type of invest­ing is for a reg­u­lar investor,” Szko­da said. “It real­ly makes the invest­ing process much more open to gen­er­al public.” 


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  • Casey Wag­n­er

    Block­works

    Senior Reporter

    Casey Wag­n­er is a New York-based busi­ness jour­nal­ist cov­er­ing reg­u­la­tion, leg­is­la­tion, dig­i­tal asset invest­ment firms, mar­ket struc­ture, cen­tral banks and gov­ern­ments, and CBD­Cs. Pri­or to join­ing Block­works, she report­ed on mar­kets at Bloomberg News. She grad­u­at­ed from the Uni­ver­si­ty of Vir­ginia with a degree in Media Studies.

    Con­tact Casey via email at [email pro­tect­ed]

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