One of the internet’s more controversial social media brands is getting into the crypto-powered fundraising game.
Revealed in an SEC filing on Tuesday, the alt-right-friendly Gab let slip it intends to raise $10 million in a forthcoming initial coin offering (ICO). But perhaps most notable about the company’s plan is its decision to take a compliant route to reaching investors.
As opposed to opening up its token offering to just any global buyer, Gab will pursue its funding under Reg A+, a creation of the 2012 Jobs Act that allows non-accredited U.S. investors to buy equity in startups. (Gab first announced its plans to run an ICO in August, but hadn’t revealed how much it would raise or how it would do so.)
Following the filing, Gab CEO Andrew Torba clarified that the company has created 2 million ethereum-based “gab” tokens that, due to the mechanics of the design, will effectively function as Class B shares in the company.
Selling for $5 apiece when released, Gab tokens will represent 16.6 percent of the total equity in the business, Torba said, adding:
“There’s no tricks or utility made-up nonsense. It’s an equity token plain and simple.”
Equity held in gab tokens may be reduced later with the issuance of new shares of common or preferred stock, as the circular acknowledges. (The token shares are non-voting.)
To those who have been following closely, though, Gab’s plan of action may not be surprising. For one, the company has been dismissive of many aspects of the ICO trend to date, referring in another Medium post to a controversial project as a “dumpster fire.”
Utsav Sanduja, Gab’s COO and global affairs director, expounded on this theme in an email, writing that he believes many ICOs have been “fraudulently raising funds” by bypassing regulations and standards.
“We believe this is the wrong approach,” he said. “We have many crypto millionaires on Gab who love liberty and our mission, but were unable to invest in our last round which was fully in fiat.”
Launched in 2016, the company is known as a gathering place for the alt-right.
A visitor to the site today will find lots of posts about President Donald Trump, memes mocking activist celebrities and a pretty decent animal photos thread (with a smattering of body painting mixed in among the dog memes).
Despite making some noises last year to diversify its audience, the SEC filing describes the “massively underserved” niche market it hopes to capitalize on:
“We estimate that there are over 50 million conservative, libertarian, nationalist and populist internet users from around the world who are seeking an alternative to the current social networking ecosystems.”
Investors have already registered an intention to buy $1.6 million-worth of tokens, and there is no date scheduled for the offering because it’s contingent on regulatory approval, though the team hopes to run the sale in the first or second quarter of the year.
Social media exodus
Stepping back, details were also revealed about the platform on which the tokens will operate and how it could add value to Gab’s existing offering.
The company, for example, has a vision to create a new architecture for social media that it’s calling the “Exodus Protocol.” It doesn’t have a white paper or a complete technical description other than a broad outline described on Gab’s page on Start Engine, from which it will sell the equity tokens.
The page describes Exodus as a peer-to-peer social networking infrastructure that will allow Gab to “offload the risks of routing data.” The current plan is to build it in a decentralized fashion, leaning on existing protocols like the distributed data protocol Dat and the content addressing system IPFS.
It may not use a blockchain at all, though Torba told CoinDesk that it is looking at both EOS and Blockstack as potential platforms.
“Nothing concrete set in stone right now. The truth is, all of this tech is super early and very unscalable,” he wrote.
The company said it has a large number of anonymous technologists working with it now helping it to assess its options, which it calls the Alt-Tech Alliance, “inspired by events that took place at Google last year when engineer James Damore was fired,” Sanduja explained.
The engineer was let go in August for writing a memo arguing that men may be better suited for engineering roles at the company. It put out a call for the best of the best engineers to join, but that Alt-Tech Alliance’s channel on Gab only has two posts.
Torba said:
“The point of this ICO is to raise capital to build out a team to make Exodus happen. The goal is a censorship-resistant, open-source communication protocol that no government or corporation can censor.”
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Blockstack.
Trump image via Shutterstock.