Development of a White Paper for an ICO

MLS by Oladipo Opanubi has just concluded developing a whitepaper for an ICO. You might question what a white paper is and also an ICO. Lets kick off with the ICO. As explained in yesterdays article an ICO is an Initial Coin Offering very similar to an IPO. For more on that please see yesterdays article. A white paper is a precursor to an ICO and is used in the same way a prospectus is used in a traditional IPO. According to https://cointelegraph.com/ a white paper is: ” … a document which includes an outline of a problem that the project is looking to solve, the solution to that problem as well as a detailed description of their product, its architecture and its interaction with users.” Potential subscribers to the ICO are greeted with a white paper and the success of an ICO is largely determined by the drafting of the white paper.

You can pretty much guess what needs to occur ahead of the white paper being drafted. A comprehensive due diligence of course. The success of pin pointing what a subscriber requires to see to make an informed decision on if to subscribe to the ICO depends upon if the data in the white paper is verifiable? Hence its important that the due diligence be a deep dive due diligence. At MLS we would do our own AI based due diligence ahead of developing the white paper and thereafter use same process to create an exchange in a sell-side structured VDR (virtual data room) for the subscriber to do their own due diligence. So we have two due diligence exercises, the first for developing the white paper and the second for the subscriber to the ICO. Everything in the exchange of the whitepaper must align with what is in the VDR otherwise it begins to raise doubts about the opportunity in question.

Another part of the due diligence process that is critical is KYC on subscribers.

… the pseudo-anonymous nature of token offerings (ie ICOs) makes it technically impossible to determine a subscribers real identity. The only transparent feature known about the investors is their wallet address, i.e., the combination of numbers and letters that subscribers use to send and receive tokens. Although token transfers can be reconstructed using the information stored on blockchains, they never reveal the true identity. Hence, the term “pseudo-anonymous.” - https://cointelegraph.com/

Verification of investor identities via KYC (know your customer) or whitelist registrations builds confidence in the eco-system of coin offerings. Potential investors provide personal data (e.g., photo IDs and email addresses), undergo approval processes, and explain their intention to buy the token in question in a short.

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MLS (Managed Legal Services) by Oladipo Opanubi specialises in Due Diligence for M&A and Financing transactions. We utilise technology such as VDRs, AI, and Deep Dive analytics to get the job done. Though we emerged from a Law Firm most of our resources are technologists supported by subject matter experts.

Tokenization as a pathway to Corporate Finance

The current economic landscape has placed several impediments in the way of funding operations and acquisitions. Understandably traditional investors are cautiously awaiting the storm to blow over before proceeding with pending opportunities. Financial intermediaries are responding to the conservativeness of their traditional source of funds and holding back with proceeding with transactions.

Despite this lack lustre approach to transactions, money is still seeking channels through which it can funnel itself to opportunities and these opportunities are still there. Corporates still have a need to acquire more infrastructure and in some cases acquire other corporates.  

There are a set of advisors that these seem to have little time or resources to take on new transactions. Once approached their response is we are booked up for the next couple of months. These are ICO advisors. These advisors appear to be where some monies have found a channel through which to meet opportunities. What is an ICO (initial coin offering)? An ICO is a listing of digital assets on a crypto exchange. Very much similar to the traditional IPO but decentralised, without any intermediaries, and relies upon social media type of infrastructure as a means to market the digitised securities.

Pretty much anything can be digitised or as I prefer to refer to it, tokenized. Once tokenized the former brick and mortar asset can now be listed on a crypto exchange. We come in at the phase of conducting the due diligence on the brick and mortar asset or opportunity which is necessary to identify its value ahead of tokenization and subsequent listing at a particular price per token on the exchange.

Corporates can explore this blossoming approach to crowd funding acquisition of assets or corporates seeing as both of the aforementioned can be digitised using tokenization. This particular approach lends itself well to assets or opportunities which can be monitored using iOT (internet of things). The following lend themselves to iOT infrastructure: a QSR (Quick Service Restaurant); an upstream LNG player providing domestic supply; a logistic company; an agriculture based production company and a property development firm. These are just five of thousands of operations that now lend themselves to iOT and hence to wooing funding via digitisation of their assets.

Regulators' core concern with this approach to corporate finance is the need for such transaction owners to do their KYC on investors and for such tokenized securities more importantly to be registered for monitoring purposes.

Please contact us if you would like some help exploring due diligence and drafting whitepapers for tokenization and ICO listing.

MLS (Managed Legal Services) by Oladipo Opanubi specialises in Due Diligence for M&A and Financing transactions. We utilise technology such as VDRs, AI, and Deep Dive analytics to get the job done. Though we emerged from a Law Firm most of our resources are technologists supported by subject matter experts.