💼 BCAP Token: A 50% Discount to Book Value
One of the top tokenized VC funds is trading for a discount!
Happy Monday, Rainmakers! 🌴
As always, we have two captivating topics for you to dive into:
1️⃣ 💼 BCAP Token: A 50% Discount to Book Value
2️⃣ 🧑⚖️ SEC Declares Crypto Governance Token a Security
Without further ado, it's time to…
Get liquid 💧
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💼 BCAP Token: A 70% Discount to Book Value
Blockchain Capital, founded in 2013, is one of the earliest and most active venture investors in the blockchain industry.
In April 2017, Blockchain Capital launched its first security token, BCAP, a tokenized venture fund. This Security Token Offering (STO) event raised $10M USD, with each token selling for $1.00.
BCAP tokens represent fractional ownership in Blockchain Capital III Digital Liquid Venture Fund, LP, meaning investors are entitled to a share of the profits and returns generated by the fund.
The company's mission is to help entrepreneurs build world-class companies and projects based on blockchain technology by providing them with the tools they need to succeed, such as capital, domain expertise, partnerships, recruiting, and strategy.
Blockchain Capital has invested in over 100 companies and projects since its inception. The company's portfolio includes companies in the crypto and blockchain space, such as Kraken, Securitize, and Anchorage, as well as various other companies and cryptocurrencies leveraging blockchain technology to disrupt industries.
In a press release on January 1st, 2023, released on Securities.io, Blockchain Capital announced that the net asset value (“NAV”) of each BCAP token as of December 31st, 2022, is $18.00. A complete overview of the BCAP assets can be seen below:
The last trade of the BCAP token on the market happened on Securitize Markets for $4.50, representing a 75% discount to the NAV reported by Blockchain Capital. The order book now has BCAP available for a limited buy for $5.48, still representing an almost 70% discount to the token's reported underlying assets value.
I really can’t imagine who is selling at these prices...
When evaluating an investment's value, investors can use a few different metrics. One of the most common is the net asset value (NAV), which represents the total value of all the assets in a fund or portfolio minus any liabilities.
Another important metric is the book value, which measures the value of a company's assets on its balance sheet. The book value is calculated by taking the total assets and subtracting any liabilities and intangible assets. Hmmm, these sound very similar to me.
However, one key difference between NAV and book value is that NAV considers the market value of assets, whereas book value is based on the historical cost of investments. Looking at the “book value” in the case of BCAP, whose support and liabilities are public, we can use the cost basis above to generate a better “book value figure” of ~$8.99, a 50% discount to the price BCAP last traded for.
Whether looking at the market (NAV) or historical value (cost basis) of BCAP, you’re still looking at a pretty sweet deal at current secondary market prices.
Overall, the BCAP token, issued by Blockchain Capital, offers a unique opportunity for investors to access a diverse portfolio of venture investments in the blockchain industry.
With a reported NAV of $18.00, the token is currently trading at a significant discount, offering a potential upside for investors.
To stay updated on the latest developments and performance of the BCAP token, readers can visit the STM.co website for the latest news and information.
BCAP is available to US accredited investors on Securitize Markets secondary marketplace and will resume trading on INX One shortly.
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🧑⚖️ SEC Declares Crypto Governance Token a Security
The U.S. Securities and Exchange Commission (SEC) has charged infamous degen Avraham Eisenberg with market manipulation that cost Solana protocol Mango Markets $116M.
In the complaint, the SEC refers to Mango Markets’ “so-called governance token,” MNGO, as a security. MNGO fell on the news, dropping more than 8%.
The SEC's move to call MNGO a security is in line with the agency's recent stance on the classification of digital assets.
This recent announcement by the SEC is significant as it shows the agency's commitment to rooting out market manipulation, regardless of the type of security involved. It also highlights the SEC's belief that MNGO is an "investment contract" offered by the Mango Markets team, making the token a security subject to SEC registration and oversight.
In its complaint, the SEC argues MNGO is an “investment contract” offered by the Mango Markets team, making the token a security subject to SEC registration and oversight.
SEC regulations are more onerous than commodities, and the crypto industry has fought any suggestion that cryptocurrencies and governance tokens are de facto securities.
In our previous newsletter, we discussed the SEC's use of the Howey Test to determine whether or not a cryptocurrency is considered a security. Now, the SEC has applied this test to the "so-called governance token" MNGO, issued by the Solana protocol Mango Markets, and deemed it a security. This is a significant development for the crypto industry, as other governance tokens may also be considered securities by the SEC.
It is important for investors and participants in the DeFi space to be aware of the regulatory environment and to conduct their own due diligence before investing in any digital assets.
This announcement follows the arrest of Eisenberg in Puerto Rico last month in connection with his alleged manipulation of MNGO.
Eisenberg was previously charged by the federal prosecutors in New York and the Commodities Futures Trading Commission for manipulating the price of his token, which briefly shot up to $0.91. Eisenberg then borrowed $116M in various crypto tokens against the inflated value of his MNGO holdings. Mango Markets was left insolvent.
He later returned about $67M in exchange for a promise the Mango team would not pursue legal action. But he famously took to Twitter to gloat over his “highly profitable trading strategy.”
"I was involved with a team that operated a highly profitable trading strategy last week.I believe all of our actions were legal open market actions, using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are. Unfortunately, the exchange this took place on, Mango Markets, became insolvent as a result, with the insurance fund being insufficient to cover all liquidations. This led to other users being unable to access their funds. To remedy the situation, I helped negotiate a settlement agreement with the insurance fund with the goal of making all users whole as soon as possible as well as recapitalizing the exchange. This is similar to how auto deleveraging works on exchanges such as Binance and Bitmex, clawing back some profits from profitable traders in order to ensure all users funds are protected. As a result of this agreement, once the Mango team finishes processing, all users will be able to access their deposits in full with no loss of funds."
This is not the first time the SEC has taken action against market manipulation in the crypto space.
As David Hirsch, chief of the SEC's Crypto Assets and Cyber Unit, said in a prepared statement, "the SEC remains committed to rooting out market manipulation, regardless of the type of security involved."
This case serves as a reminder to investors to exercise caution, conduct thorough research when considering investing in any cryptocurrency, and be aware of the regulatory landscape surrounding them.
As always, stay informed and updated on the latest developments in the blockchain industry by visiting our website at STM.co.
💦 What else is Drippin’
STM’s Twitter Spaces is coming back!
This week’s topic, “Real estate, Tokenization, and the Market,” will feature platforms and issuers in the space.
Join us on Thursday at 1pm EST!
Welcome back to The State of Security Tokens!
This year's edition is all about the most significant moves in the institutional adoption of tokenized assets, and let me tell you, it's MASSIVE. We've got all the heavy hitters you'd expect, like KKR and JPMorgan, but also some exciting new players like AllianceBernstein, Figure & Provenance, and Regulated Liability Network (RLN).
Trust us. You won't want to miss this deep dive into the world of institutional security tokens. So sit back, relax, and get ready to be wowed by all the action in The State of Security Tokens 2023 - Institutional Edition.👇
Everything in this report is for informational and entertainment purposes only. Nothing in this report should be taken as financial advice or as an inducement to purchase or sell any security. Nothing in this market report should be used as legal advice. Always do your own research before making any decisions regarding financial transactions of securities.
• No money or other consideration is being solicited, and if sent in response, will not be accepted;
• No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is filed and only through the platform of an intermediary (funding portal or broker-dealer); and
• A person’s indication of interest includes no obligation or commitment of any kind.