Crypto Wallet Exodus Seeks SEC Permission to Tokenize Shares, Aims for $75M Raise

Cryptocurrency wallet Exodus has applied for permission from the U.S. Securities and Exchange Commission (SEC) to carry out a public offering of tokenized shares in the company.

Exodus announced Wednesday that it had filed its offering circular with the regulator, and upon approval will carry out a Regulation A Tier 2 offering (often called a Reg A+). By way of this novel equity token tied to shares in the company, Exodus hopes to raise some $75 million, tapping the million or so active users of its wallet.

The filing was made last Friday and the SEC will take at least 21 days to give it the stamp of approval, Exodus said. If approved, the wallet firm joins only a select few in the crypto ranks to go the regulated route, chief among them Blockstack and its $28 million raise in September 2019.

“We’ve been working on this submission for a long time, with the whole process of back and forth, back and forth,” Exodus CEO and co-founder JP Richardson said in an interview. “Obviously, it still needs to be approved and I can’t speak to any certainties here. I can tell you how excited I am.” 

Initial coin offerings (ICOs) were all the rage back in 2017, with many blockchain firms selling tokens over the garden fence to an eager audience of accredited (and, in some cases, credulous) investors. 

Exodus says it wants to allow the average Joe to become an investor in the firm and owner of its equity via a regulated token offering. Most ICO raises that chose a regulated route did so via a Reg D exemption from the SEC, which means only accredited investors, generally with over $100,000 in spare capital. Only a handful of blockchain companies chose the retail-friendly Reg A+ approach.  

Exodus prep

Exodus began working in earnest on preparing a submission for the SEC back in May 2020, Richardson said. He estimated the cost of the process had come in at around $1 million. To get to the filing stage, Exodus enlisted the help of Wilson Sonsini Goodrich & Rosati (WSGR), the same law firm Blockstack used to handle its Reg A+. 

The Exodus offering will allow the firm to sell equity tokens for $27.42 a peice (the minimum investment is $27.42). The sale will all happen inside the app and be confined to bitcoin, ether and USDC. It’s worth noting that the $50 million limit for a Reg A+ changes to $75 million on March 15.

Exodus investors must first complete a know-your-customer (KYC) check with Securitize, a firm that specializes in security tokens. The offering will be done on a first come, first served basis.

Exodus has raised only small amounts of money in the past, said Richardson: two small rounds, comprising $368,000 in September 2016, followed by $170,000 in February 2017. So how confident is he about the chance of raising the full amount?

“I feel really good about raising $75 million,” he said.