distributing finance™

Introduction

Strategic Fund Investors’ Questionnaire

This document is meant to be viewed by a small group of institutional investors. It is not for public use and is subject to updates. Last published update was on November 18, 2018. We suggest that you visit

 https://docs.google.com/document/d/1S1HTQL5RGgFIqkj8DDtkPE_NPrwxFszFkvteCl-G_8M/edit?usp=sharing 

periodically for the most updated information.

What is the name of your project?

IOB Proof of Enquiries & Trades (PoET) Protocol, A Financial Market Transparency Protocol and Trading Technology Applications.

What is your project website URL?

https://iob.llc

Please describe your project in 3 sentences.

  1. We understand the markets and all their dirty secrets and are building a market transparency protocol, PoET, that will help prevent market manipulation. This protocol may become the second project with a real-world application (after RippleNet) but the first one with a significant revenue starting 2019.
  2. Leveraging over 40-combined years in financial markets, we are building a new permissioned, P2P financial network (the multi-dimensional, multi-layered IOB Mesh) that enables not only the crypto trading but also all types of financial transactions instantly with no commission.  
  3. We have not only a long-term vision but also running a profitable business, and in the next two years we position ourselves to be a top automated-trading service provider in the world that bridges the gap between the major crypto exchanges and the institutional investors/traders once the floodgate is opened to the managed money in Wall Street, the City of London, and Frankfurt.

What is your go-to-market strategy?

Financial markets regulatory and compliance market

We develop a market transparency protocol that help regulators implement financial market regulations while help brokers and traders easily meet their compliance requirements: Both regulators and traders/brokers can use PoET to fulfill their compliance requirements easily and cost effectively worldwide.

Regulators around the world can leverage IOB PoET protocol in financial market regulation and surveillance cost effectively. A contract to provide customized regulatory solutions for a single country is estimated to worth over tens of millions of dollars in revenue annually.

On the other side of the coin, the costs to meeting the various, ever-increasing compliance requirements are high and time consuming for regulated market participants When both broker-dealers and professional traders join the PoET protocol, each one of them will have a unique PoET address that can be provided to the authorities when being audited.

Trading analytics data services market

PoET records all market activities including both cancelled and executed orders, and most importantly, we have large number of individual traders’ trading records. The ability to match exchange order book data with individual traders’ data provides an invaluable insight no market data provider has been able to obtain currently.

While PoET protocol is open source and its hashed data remain in the public domain, IOB LLC performs data analyses and offers trading analytics data products and services through its proprietary technologies in both deep learning and quantitative trading development.

Institutional crypto trading market  

The institutional crypto trading market is just emerging. IOB currently has access to over 160 institutional clients within our network of partners, sister companies and subsidiaries located in the US, Germany, and the UK.

In the next 6-12 months, IOB anticipates an organic growth of users as the regulatory landscape on crypto custody and crypto ETF approvals becomes more clear, crypto index funds emerge, professional-grade exchange trading platforms become more available as well as an increasing number of products and features being added to the IOB Market Analytics and Smart Trading™ System.

Currently, we have a large professional network and enjoy a word-of-mouth advantage due to our leading position in technology and trading strategies. The cost per new client acquisition is at a minimal at this Phase-I business development stage.

In the next two to three years,we develop financial market regulatory solutions and bring a comprehensive professional high-performance crypto trading system to high-volume traders.

We help crypto exchanges meet the needs of the institutional investors and traders: Crypto trading has been in its early-development stage thus far. We are leveraging our experience in high-performance, high-frequency trading and our business relationship with the professional money management industry to help exchanges improve their trading platforms with better trading technologies, professional portfolio management tools and risk-control algorithms. We also help drive large-volume traffic to the best exchanges.

We help professional traders and investors: Offering a real-time Market Analytics service. Besides providing a state-of-art high-performance trading system, IOB champions a unique defensive trading strategy that derives data from PoET and offers a real-time automated trading advisory service to professional investors in all financial markets. We advise our institutional clients to play a self-preserving defensive game at all times while devising a full suite of active offensive strategies that will take full advantage of the market inefficiency ethically.

Businesses and revenue sources in stages

The most important thing is that we understand the life cycle of those revenue sources. The most profitable businesses in the short-term may die due to the changing market condition in 3-4 years, and other revenue sources must take over and surpass them.

We aim to build a long-lasting, big enterprise that will have a net profit of around $50 mm in 3 years.

IOB LLC

Revenue Projections

Years 1 to 5

($)

2017

2018

2019

2020

2021

Venture Investment Cap Gains

Number of Partial Exits

0

2

3

5

Realized Gains

450,000

550,000

750,000

Total

0

900,000

1,650,000

3,750,000

Venture Investment & Consulting Dividend

Number of Cos

1

2

3

5

Avg Dividend

0

80,000

100,000

120,000

Total

0

0

160,000

300,000

600,000

Venture Total

0

0

1,060,000

1,950,000

4,350,000

Analytics Report Subscriptions

Number of Customers

80

180

1,500

Fee per Customer

3,600

4,200

3,600

Total

0

0

288,000

756,000

5,400,000

Analytics Real-time Subscriptions

Number of Customers

50

80

600

Fee per Customer

12,000

19,200

13,200

Total

0

0

600,000

1,536,000

7,920,000

Analytics AOBO Subscriptions

Number of Customers

20

50

360

Fee per Customer

110,000

216,000

180,000

Total

0

0

2,200,000

10,800,000

64,800,000

Analytics Total

0

0

3,088,000

13,092,000

78,120,000

Exchange Portfolio Management Packages

Number of Exchanges

5

12

10

Fee per Exchange

300,000

900,000

1,440,000

Total

0

0

1,500,000

10,800,000

14,400,000

Exchange Smart Trading Packages

Number of Exchanges

5

8

7

Fee per Exchange

450,000

2,160,000

3,000,000

Total

0

0

2,250,000

17,280,000

21,000,000

Exchange Packages Total

0

0

3,750,000

28,080,000

35,400,000

Smart Trading Pro Subscriptions

Number of Customers

200

450

1,600

Fee per Customer

4,800

14,400

24,000

Total

0

0

960,000

6,480,000

38,400,000

Smart Trading Funds

Number of Funds

0

1

2

AUM

10,000,000

20,000,000

Expected Return

18%

24%

Carry

18%

12%

Profits

0

0

0

324,000

1,152,000

Proprietary Trading

AUM

5,000,000

12,000,000

Expected Return

36%

24%

Profits

0

0

0

1,800,000

2,880,000

Smart Trading Integrated Systems

Number of Customers

0

0

75

Price per Customer

100,000

Total

0

0

0

0

7,500,000

Smart Trading Total

0

0

960,000

8,604,000

49,932,000

SmX Network Fees

Number of Transactions

0

0

2,880,000

40,150,000

Fee per Transaction

2.14286

0.66667

SmX Total

0

0

0

6,171,429

26,766,667

The IOB Mesh Network Fees

Number of Transactions

0

0

0

0

15,000,000

Fee per Transaction

1.29630

Mesh Total

0

0

0

0

19,444,444

Net Revenue

0

0

8,858,000

57,897,429

214,013,111

Revenues by Months & Quarters

($)

Months

Year 1

Year 2

Year 3

Year 4

Year 5

Month 1

0

0

0

2,894,871

8,560,524

Month 2

0

0

0

2,894,871

10,700,656

Month 3

0

0

0

4,052,820

12,840,787

Total 1st Quarter

0

0

0

9,842,563

32,101,967

Month 4

0

0

88,580

3,473,846

12,840,787

Month 5

0

0

177,160

4,052,820

14,980,918

Month 6

0

0

442,900

4,052,820

14,980,918

Total 2nd Quarter

0

0

708,640

11,579,486

42,802,622

Month 7

0

0

885,800

4,631,794

17,121,049

Month 8

0

0

1,062,960

5,210,769

19,261,180

Month 9

0

0

1,417,280

5,789,743

21,401,311

Total 3rd Quarter

0

0

3,366,040

15,632,306

57,783,540

Month 10

0

0

1,505,860

6,368,717

23,541,442

Month 11

0

0

1,594,440

7,526,666

27,821,704

Month 12

0

0

1,683,020

6,947,691

29,961,836

Total 4th Quarter

0

0

4,783,320

20,843,074

81,324,982

Total for year

0

0

8,858,000

57,897,429

214,013,111

Average Revenue

by Month

0

0

738,167

4,824,786

17,834,426

by Quarter

0

0

2,214,500

14,474,357

53,503,278

Key Assumptions:

1. IOB Analytics will be a major and consistent growth engine;

2. Smart Trading has a long-term sustained growth;

3. Exchanges need our products and services, but their business model is not sustainable and severe competition will first benefit us, but long-term growth outlook not very bright; what works in the near term may not work later.

4. SmX will start in the H2 2019, and will be picking up the next years. This is not a commission-based transaction model, and the business will pick up in Q4 2020. Network fees are shared with other nodes. We'll have the IOB Analytics and Smart Trading integration.

5. Once live, we expect the number of transactions on the IOB Mesh will grow exponentially starting 2022. Network fees are shared with nodes. Transaction volume will be big but is very hard to quantify at this point in time.

6. Venture investing will restart in H2 2019 as we're building deep integration of our tech platforms. We invest in companies that will compliment our own business and technology. We do not charge an annual management fee.

7. Token sales are treated as debts with no interest costs or repayment requirement.

8. We anticipate that our near term revenue driver, Exchange Packages, will be flattened or even decline in 3-4 years, while IOB Analytics and Smart Trading take the lead. The biggest revenue sources after 2022 will be from SmX and IOB Mesh.

What is the expected rate of return of this investment and why?

IOB is pursuing a high revenue-growth model through its venture investments, trading and its high-value IOB Analytics products and services, combined with an IOB Token Ecosystem model where hundreds of millions of IOB Tokens are bought and held.

Originally offered at $1, we aim to create our token value to be in the high teens, if not hundreds.

We are also open to a duel TAO + IPO corporate finance structure track. IOB promotes a ‘Same Token, Multiple Offerings’ of its security token offering model. TAOs are being filed in Germany and US at this time. We also expect to offer our equity listing of the holding company, IOB LLC. In addition, one or several of our subsidiaries can take advantage of local public IPO when appropriate.

We are offering an exchange strategic investor a strategic partnership through this investment at a pre-public offering valuation. It is conceivable your early investment in IOB can be one of the best investments you have ever made from a financial investment standpoint alone.

Please describe your token economics here (such as token distribution, budget allocation, team, advisor, investor's lock-out periods, any pre-mined, max supply, etc.)

IOB pioneers a The Same Token, Multiple Offerings and Listing strategy to help promote an international security token standard for the future. This is also due to our deep belief of a new global asset class based on the DLT with a worldwide liquidity.

Token Status

IOB has issued approximately 8.75 million IOB Tokens to pre-sale investors under Reg D. at the end of 2017 at $1 per IOB Token.

Currently ongoing:

A preliminary IOB Token economics overview is available at https://iob.llc/taos/iob-token/.

A detailed financial model is available upon request.

Please tell us about the founding teams' background as well as any relevant experiences.

Core Team

Yale ReiSoleil

Co-founder, Chairman & CEO of IOB LLC, US

Yale started his financial market career in 1996. Yale was a publicly-traded mutual fund manager and currently co-manages Sichuan Hongjian Fund, a ¥20 billion acquisition fund, and a cross-border high technology venture capital fund based in China. Being qualified for several US financial licenses, Yale has a healthy dose of ‘fear’ (and respect) for financial regulations.

Through a personal investment in a high-frequency trading (HFT) firm and established the first trans-Pacific trading data direct-feed fiber optic line between New Jersey and Shanghai in 2012, Yale has gained a deep understanding of the global electronic market technical infrastructure, and has identified the ‘trading signatures’ of the top HFT firms in the world. As CEO and Chief Investment Officer (CIO), Yale developed several proprietary quantitative trading systems with over a dozen position and hedging trading strategies built on proprietary software and hardware developed in-house. Being a speeder trader himself, Yale understands well many of the tricks and pockets of unfairness in the current financial markets.

Yale first read the Bitcoin whitepaper in 2013. Deeply impressed by it but was not smart enough to invest at that time. Yale started buying and holding Bitcoin after it first reached $430, and Etherium around $8, after he published an article on Steemit titled “bitcoin goes to US$50,000 – 1,000,000 in 10 to 20 years!

Yale writes a blog series on “The Trading Basics Everyone Should Know” at https://iob.llc/about/blog/.

Uwe Zimmer

Co-founder & Board Director, Germany

With more than 30 years of financial market experience, Uwe is a veteran in the asset management industry. He has built up his vast expertise at Prudential Securities, as a director of Hypo Capital Management and at BB-PrivatFinanz-Service GmbH. In 1998 he founded Meridio Asset Management AG, which he successfully managed as the CEO through several bull and bear markets. In 2016 he left the market-listed company to start the Robo Advisor Fundamental Capital and z-invest GmbH which offers digitizing advisory services for the financial industry. Since 2012 Uwe has experience in the cryptocurrency market.

DW

Lead Developer, HFT Trading, US

DW holds a Doctor of Philosophy in Computer Science. He has more than 10 years’ experience in High-Frequency Trading and Quantitative Trading platform design, and his expertise is mainly in trading platform software/hardware design, trading network design, and trading strategy design and implementation. The trading systems designed by him are running in dozens of main stocks and futures exchanges in North America, Europe, and Asia.

DW was the ‘Unofficial World Champion of Financial Data Processing Speed Competition’ in 201x.

Amit Srivastava

Vice President & Portfolio Manager, US

Amit is Senior Partner at Cycle Capital and Senior Portfolio Manager at Qingdao High Technology Equity Investment Fund. He has more than 30 years in operational, Venture Capital, cross-border transactions and fund management in high tech companies. Throughout his career, Amit has invested over $10 billion in private equity and venture capital deals.

Amit holds an MBA from the Wharton School of the University of Pennsylvania.

Board Members and Advisors

Simon Telfer

Board Director, UK

Simon is a Technology Evangelist with 30 years’ experience delivering large technology transformation programmes in a range of industries from media, to retail and public sector.  Simon has worked in CGI,  Accenture, and EDS where he claims to have always been an ‘executive geek’, remaining true to his engineering background and striving for simple, innovative disruptive solutions. Over the past year, Simon has taken a hands-on interest in the power of DLT technology working across a number of volunteer startups and community projects.

Alexander Borodich

Board Director, Russia

Alexander Borodich is a pioneer in the fields of innovation and DLT world. Alexander was named "The Most Active Business Angel in Russia" by Russian Venture Company. He is Chief Dream Officer and Managing Partner of Marketing Communication Agency Future Action, founder of VentureClub.co, the fifth largest crowd-investing platform in Europe, and founder of Russian Cryptocurrency and an investor in more than 70 projects.

Bruno Maumené

Advisor, Business Development, Switzerland

Bruno started his professional life as a Publisher in the field of Economics initially in Switzerland, and subsequently in South-East Asia and South America.

He is a co-founder of Screener.com SA, a financial analysis company. In 2004, he joined Fundo and was actively involved in developing the company’s quantitative risk-management tools. From 2008 to 2012, he sat on the Foundation Management Board of the Prisma, a Swiss investment foundation based at Vevey.

Bruno Graduated with degrees in Arts and Economics from the University of Geneva.

How did you get into crypto and what are your favorite crypto projects (other than your own)?

Yale ReiSoleil, the CEO of IOB LLC first read the Bitcoin whitepaper in 2013. Deeply impressed by it but was not smart enough to invest at that time, Yale started buying and holding Bitcoin after it first reached $430, and Ethereum around $8, after he published an article on Steemit titled “bitcoin goes to US$50,000 – 1,000,000 in 10 to 20 years!

In early 2017, Yale and John McAfee got together and started ReiSoleil McAfee Zhu Ventures LLC (RMZ). The company is later rebranded as IOB LLC.

We like Ripple, among others, for it is one of few projects with real world applications.

What is the biggest problem that you are trying to solve and why solving this problem matters to you?

The century-old financial market model that only benefit a very few people while most investors facing an insurmountable odds of high transaction costs, market manipulation and the lack of sophistication and available tools.

It’s about time. The world is at the dawn of the DLT era, the traditional financial markets are about to be forced to experience a much-needed transformation.

We envision a global financial market system where most market participants have a better chance of making a profit with shared real-time information, advanced risk and portfolio management tools, and sophisticated automated trading systems with the much lower cost of transactions.

This matters to us greatly because, as a trader/investors, we want all the benefits that the DLT brings. On the other hand, as a business providing products and services to clients, we want to help them stay in the game as long and profitable as possible, unlike in a traditional zero-sum game market where financial service providers have to constantly look for totally new clients because the old ones will lose their money quickly and exit the market completely.

Maintaining the new business from existing clients is much more cost effective and desirable compared to the high cost of new client acquisition.

In addition, we bring a comprehensive professional high-performance crypto trading system to high-volume traders.

How decentralized is your project and why is decentralization or blockchain essential to the success of this project? Will a centralized solution solve this problem just as well?

In the near future, several of our financial products and services will be using permissioned, hybrid DLT technology. However, our entire business is built on the premise of the decentralized nature of DLT.

The traditional centralized solutions are contrary to everything were are building for. The traditional markets are highly centralized and cause the problems we are facing today. So our project cannot be implemented with a centralized platform.

What are some of the obstacles you see in this project and how do you plan to overcome them?

Data Loss and hacking:

Data loss due to technical or operational failures and security breaches could cause risks of losses or misuse of investors and clients’ proprietary information and digital assets.

Cybersecurity as a top priority: IOB is committed to investing in the best available cybersecurity technologies, building a team of expert researchers, engineers and talented hackers in this field, adhering to the highest industry standard, and using the best business practice at all time.

Competitiveness and potentially missed opportunities:

IOB operates in a highly competitive market for trading performance measured by short-term results. We may misidentify the winners of the next generation technology and lose the competitive edge we now possess.  

Investing in R&D: We must budget a considerable portion of available resources in trading, DLT development, artificial intelligence, and data science and strive to be future proof at all times.  

A global business and technology network: Don't be complacent and stay up to date by keeping in touch constantly with our subsidiary offices, clients, partners, innovators, and friends in major global financial and tech centers in Wall Street, Silicon Valley, Frankfurt, Paris, London, Shanghai, Beijing, Hong Kong, Shenzhen, Singapore, Tokyo, Seoul, Sydney, Toronto, and Dubai is a way for us to be well informed.

We know we are in trouble if we start focusing on ourselves, instead of focusing on our customers.

What are your competitors in the crypto and non-crypto space? What is your competitive advantage over other projects trying to solve similar problems?

1) Financial transparency DLT protocol competitor:

  1. Main competitor: None. There is a void in this space.
  2. Our position in the market: We are the publisher of a market transparency protocol.
  3. Our winning strategy: For the first time in the history of financial markets, we’re getting to the bottom of all orders to unveil the completely hidden canceled orders and make them available to anyone on DLT.
  4. What have we done and the results: We are in the process of acquiring data, designing the best ways to store, hash and verify the historical all-order financial data, which will not only be applied to the crypto trading data, but also to traditional financial markets such as stocks, bonds, commodity futures and more.  

2) Market research provider:

  1. Main competitor: We consider Bloomberg to be our main future competitor. However, Bloomberg does not have professional-grade crypto trading products yet. Even if they do later, along with their existing traditional analytics and equity trading platform, data and news services for financial companies, they will likely stay away from revealing the market-manipulating orders due to the fear of alienating their existing client base.
  2. Our position in the market: Market data aggregators such as coinmarketcap.com provide historical price data, the ‘tip of the iceberg’ that accounted to a very small percentage of the executed orders. It is not a full picture of all of the market actions. IOB Analytics mine all the orders, canceled and executed, to provide real meaningful trading intelligence to pro traders.

Other data and analytics companies such as bittsanalytics.com collect market sentiment data from social media. Their trading advice is largely based on charts and indicators that were developed before the sophisticated electronic trading era (pre-2005) when traders manually clicked the ‘buy’ and ‘sell’ buttons.

IOB Analytics data and services are for traders with automated quantitative trading systems by high-performance network servers processing a large amount of data that is not meant to be seen as ‘candlestick or line charts and indicators’ for manual human traders.

  1. Our winning strategy: IOB Analytics help pro traders like ourselves to process and take advantage of the market inefficiency when trading, playing an offensive role. Meanwhile, we also help large-volume investors protect their orders by playing defense with a true market insight, a clear view of all the honest and dishonest orders. Our position and strategy are unrivaled for a foreseeable future.
  2. What have we done and the results: We are developing our Analytics product categories by collaborating with partners in Wall Street, the City of London and Frankfurt.

3) Algo trading:

  1. Main competitor: eToro is our main social trading platform competitor. Although they are aggressively expanding into crypto trading from their traditional ‘buket shop’ background, their focus is on social trading. They are not directly competing with our algorithmic trading business. We have no visible algo trading platform competition at this point in time.
  2. Our position in the market: While Knight Capital and Citadel LLC are famous in the traditional algo and HFT trading markets, with the ‘most successful’ ones being hidden and unknown to the public, no one is offering or planning to offer their trading platforms to third parties. IOB will remain one of the very few that will open up their trading system to the public. This gives us a leading position to capture a large public market share and will likely put IOB as an enemy among Wall Street rivals. We believe a large number of pro traders want to have access to our trading technology that they cannot develop in-house.      
  3. Our winning strategy: We have been trading successfully for over 40 combined years in the financial markets, developing HFT trading systems, making our own software and hardware connected with a cross-ocean trans-Pacific dedicated data fiber optics feed. Our trading strategies are based on far more than the commonly visible ‘charts and indicators’ most traders’ strategies are based on. We dig deep, find and use the mostly hidden data for our trading systems.

In the DLT age, we believe deeply now is the time for a much more transparent market practice. We are willing to open up our trading secrets, even though that may offend some of our colleagues in Wall Street, and may cause us to lose some ‘competitive edge.’ We believe it is worth it.

It is time to end the financial markets as a pure zero-sum game. It is time to truly create value together in participating in the markets and to help more people survive and stay in the markets.

  1. What have we done and the results: We are porting our high-frequency and quantitative trading systems in commodity and index futures markets to trade crypto markets. In order to make it an open platform where a third-party trader can plug-n-play, and even build their own trading strategies on the platform, we are changing our .exe-based UI into a browser-based user experience. Obviously, the nano-second trading speed does not apply to the crypto trading presently. Our focus for the public system now is on the automated trading, portfolio management, and risk control components.

What is the roadmap for your project? Please including specific dates and milestones if you have them. Please indicate where you are now.

2012

Yale ReiSoleil and his team started developing commodity and stock index futures trading systems (both trading high-frequency trading software and hardware ‘black boxes’) and trading in North America and China. Highest daily trading volume: 134 million yuan in contract value.

Q3 2017

RMZ (the predecessor of IOB) stated VC investing. 2 projects invested, 1 advised. Realized profits: > $2.25 million.

Q4 2017

Pre-sale concluded, over 8 million IOB tokens issued at $1/token.

Q1 2018

Exploration of TAO compliance filing in various European, Asian and American jurisdictions.

Q2 2018

IOB invested in Fundamental Capital, a BaFin-licensed asset management company, and Kession, a fully FCA-regulated financial company with broker-dealer and fund management licenses.

Q3 2018

TAO filing with BaFin (prospectus) in Germany and SEC (Reg A+) in the US.

Q4 2018 - Now

Porting algo trading and portfolio management software from traditional markets application to crypto trading;

IOB Social Investment Platform (SIP) beta

Q1 2019

Launching Smart Trading™ with 5 core strategies.

PoET Protocol prototype.

IOB Analytics Products.

Q2 2019

Expanding the IOB Ecosystem, achieving about 5 million IOB Tokens in Qualified Reserve.

Q2 2020

Launching proprietary trading fund and Managed Accounts on Smart Trading™.

Q3 2020

Building SmX™, a P2P exchange for institutional investors and traders based on technologies and data derived from PoET and Smart Trading™.

Q4 2021

Launching The ONE Finance Network, (The IOB Mesh™), a distributed, rule-based peer-to-peer network that enables all blockchain-based financial transactions fully comply with various local and international regulations. It is an upgrade from SmX™ technologies with various relevant notes that provide financial, legal, accounting other local jurisdiction compliance requirements, p2p, fast, low cost on the distributed ledger network.

Who are some other investors committed to this round or prior rounds? Who is/are the leading investors? Why do you pick them as your investors?

With over $5 mm raised through a pre-sale a year ago, we have voluntarily rejected (sent back) over $21 mm in ETH in January 2018.

We are currently in strategic talks with several major blockchain players, including several top-valued cryptocurrency companies, top exchanges as well as “traditional” investors such as Silicon Valley, Asia, and European-based VCs, Wall St. financial company and traditional banks.

Before we become the first German BaFin approved tokenized asset offering in Europe estimated in Q1 2019, We would like to have a strategic investor Lab as the lead investor in this Special Strategic Investor Round.

We are seeking strategic investors during this round. We want investors that can help further our business network as well as bring in their field business and technical expertise. We also are willing to work with investors who consider investing in IOB LLC as a hedge against their own future.

How can a strategic investor add value to your project?

We understand the world of DLT and cryptocurrencies is changing faster than most people realize. The biggest risk for us is losing our competitiveness and missing the boat when the world is changing in a fundamental way that we alone cannot grasp. We need to be part of the a strategic investor Ecosystem to be engaged constantly with the industry leaders, visionary partners, and talented newcomers alike.

Having reputable a strategic investor not only add the prestige and validation to our company, but also we can leverage its network of companies to have a better insight and partnership cooperation from industry peers, new clients, and even potential competitors.

We also believe that we can add value to a strategic investor.

  1. We can help a strategic investor build a more advanced institutional trading platform: We have submitted a technical paper that will help a major crypto exchange improve its institutional trading API, and a paper suggesting features and functions institutional investors cannot live without, based on decades of financial investing and trading experience in Wall Street and other major European markets we and our partners have.
  2. We drive institutional traffic to a strategic investor: Through IOB market maker accounts and APIs, we are directing our institutional clients and partners using IOB Smart Trading™ System directly to a strategic investor. We also bring in additional traffic to a strategic investor through our managed products in a later stage. We help exchanges have a better retention of clients by helping them avoid the typical quick crash-and-burn cycle.
  3. We can provide advanced features and products that a strategic investor can bundle into its own professional trading platform for its own clients: Over the years, Yale ReiSoleil’s trading team has developed advanced institutional-grade portfolio management tools and sophisticated risk control algorithms that are ready to be deployed out of the box. We are open to offering them to a strategic investor for integration. We help exchanges achieve higher client retention rates by making more features available to them.
  4. A strategic investor can access our regulated financial licenses: Through our investments, IOB has access to a UK FCA-regulated full financial license, several German BaFin-regulated financial and banking licenses, as well as broker-dealer licenses in the US through partnerships. We are more than happy to share the licenses with a strategic investor and help a strategic investor obtain its own local licenses in the US, Germany and the UK, and other jurisdictions.
  5. To be future-proof: Finance and financial markets are changing in more fundamental ways that have not fully been revealed. What has been considered successful may not be profitable in the near future. An investment in IOB is an investment in the future for a strategic investor.

Where is your team located?

We currently have offices in the US, German and China.

Please upload any relevant documents (deck, white paper, academic paper, or 1-pager, etc.).

Please provide your GitHub URL:

https://github.com/IOBteam

How much are you raising? What will be your post-money valuation?

Please refer to our detailed financial model as we are planning to raise up to $55 mm in 2019.

As we are seeking a strategic partnership and investment, not the full funding of the project, we are offering up to $5 million in a convertible equity stake at a post-money valuation of $103 million.

A detailed Financial Model is available upon request.

Please give 3 most important reasons why a strategic investor should invest in your project?

  1. We understand the financial markets: A financial market trading place where 95% of the people losing money is not a sustainable business model. We want to help most people accumulate wealth by participating in the markets for a long time. A lifetime client is invaluable to our business and our own IOB Token Ecosystem.
  2. We have the advanced technology: Our technology can help investors and traders play both defense as well as offense. Through PoET, advanced IOB Analytics and opening up our proprietary trading system to clients, we are building a new financial infrastructure to ignite a fire that will transform the financial markets worldwide.
  3. We are not short-sighted: Getting the funding is not the purpose of our business. Building a large enterprise that will change the world for the next 50 years is.

What can an operating/trading/exchange strategic investor get from this collaboration?

  1. We can help an exchange strategic investor build a more advanced institutional trading platform: We have submitted a technical paper that will help an exchange strategic investor improve its institutional trading API, and a paper suggesting features and functions institutional investors cannot live without, based on decades of financial investing and trading experience in Wall Street and other major European markets we and our partners have.
  2. We drive institutional traffic to an exchange strategic investor: Through IOB market maker accounts and APIs, we are directing our institutional clients and partners using IOB Smart Trading™ System directly to an exchange strategic investor. We also bring in additional traffic to an exchange strategic investor through our managed products in a later stage. We help exchanges have a better retention of clients by helping them avoid the typical quick crash-and-burn cycle.
  3. We can provide advanced features and products that an exchange strategic investor can bundle into its own professional trading platform for its own clients: Over the years, Yale ReiSoleil’s trading team has developed advanced institutional-grade portfolio management tools and sophisticated risk control algorithms that are ready to be deployed out of the box. We are open to offering them to an exchange strategic investor for integration. We help exchanges achieve higher client retention rates by making more features available to them.
  4. an exchange strategic investor can access our regulated financial licenses: Through our investments, IOB has access to a UK FCA-regulated full financial license, several German BaFin-regulated financial and banking licenses, as well as broker-dealer licenses in the US through partnerships. We are more than happy to share the licenses with an exchange strategic investor and help an exchange strategic investor obtain its own local licenses in the US, Germany and the UK, and other jurisdictions.
  5. To be future-proof: Finance and financial markets are changing in more fundamental ways that have not fully been revealed. What has been considered successful may not be profitable in the near future. An investment in IOB is an investment in the future for an exchange strategic investor.

What is your purpose for starting this project?

The passion, the love of what I do, and the desire to make the world a little better.

To change the status quo of all financial markets.

We feel lucky to be alive when the distributed ledger technology is at its early stage of disrupting the traditional financial markets, and we have the understanding and know how to be a transforming force leading that change.

We want to help most financial market participants succeed, to create more value for investors and traders, and to help them stay in the financial market for the rest of their lives.

One of the ways to achieve that is to bring a market transparency protocol to the financial world. Additionally, we want to help individual and institutional investors alike play both offense and defense when they are in the market.

And for the first time in the history of high-frequency trading, we will apply for patents as one of the top players.


distributing finance™

Executive Summary

A Financial Market Transparency Protocol and Trading Technology Applications


The Company

IOB LLC (The “IOB”) is a fintech company, developing .

IOB is the publisher of the Proof of Enquiries & Trades (PoET) protocol, a financial market transparency protocol on a commissionless professional algo trading system.

IOB Market Analytics and Smart Trading™ offer trading tools professional traders need.

A DYNAMIC FINTECH NETWORK BUILT ON THE IOB TOKEN ECOSYSTEM

As a dynamic company, IOB is evolving from a startup investment vehicle to an advanced trading and portfolio management platform, to be a full-featured P2P exchange (SmX™) built on the PoET protocol. While the company’s overall investment focus, criteria and even the main revenues of the business will evolve over time, all of IOB components in investing, algorithmic trading and advisory services have a common purpose - building a new global financial system, the IOB Mesh, powered by the IOB Token. The IOB Mesh network is a distributed, rule-based peer-to-peer network that enables all DLT-based financial transactions to fully comply with various local and international regulations.

IOB Proof Of Enquiries & Trades (PoET)

WHAT'S MISSING ON THE CHARTS?

The prices flickering on your computer screen do not tell you the whole story of what is happening in the market. Far from it. It is just a very small tip of the iceberg. It often is what you do not see that will hurt you.

Until now, you only see the ‘trades,’ the very small portion of all orders that have been executed. You do not see most of the other orders that were never filled. In fact, the majority of the orders were never filled or never intended to be filled. But they always have had a profound impact on the market and the prices that are displayed to the public.

The market is often manipulated by those unfilled orders.

Current financial markets, including cryptocurrency exchanges, can easily be abused by market insiders with front-running, direct price manipulation and spoofing, especially since the rise of proprietary dark pools and high-frequency trading (HFT). As a result, customers lost billions of dollars to the very broker-dealers they entrusted their money to, and even to the broker’s other high-frequency trading clients every year. While these practices are not necessarily illegal in some jurisdictions under current regulation, they are certainly unethical everywhere.

Several broker-dealers were caught making millions of dollars by selling their customer orders on the centralized order book to the highest bidders in the recent years, while high-frequency traders regularly send out thousands of fake orders per second with no intention to have them filled by canceling them right before they are about to be executed with the help of their microsecond speed advantage.

As regulation in the traditional financial markets is tightening the control of various market manipulations, IOB proposes a DLT solution to record every price and order enquiry ever sent - whether filled or not - and every trade ever executed on an immutable distributed public ledger, the IOB Proof of Enquiries & Trades (PoET) protocol.

PROMOTING AN INDUSTRY-WIDE FAIR TRADING PRACTICE

Through the IOB PoET smart contracts, every order that occurred on the network is recorded automatically on the distributed public ledger, regardless whether it is filled or not. The order details are permanently kept on DLT as well as all trades executed.

Anyone can examine any trade patterns made from any wallet or possible relationship of a group of wallet address. This enables traders, exchanges, self-regulated organizations and regulators to study the orders and any dishonest patterns of any particular wallet or wallets.  

When financial markets, exchanges, and broker-dealers adoption of PoET reaches a critical mass, market manipulation can be greatly reduced or eliminated.

PROOF OF ALL ENQUIRIES

Preventing Price Spoofing

Spoofing is a disruptive algorithmic trading entity employed by traders to outpace other market participants and to manipulate financial markets. Spoofers create artificial interest in trading futures, stocks, cryptocurrencies, and other products in financial markets creating an illusion of exchange pessimism in the market when many offers are being canceled or withdrawn, or false optimism or demand when many offers are being placed in bad faith. Spoofers bid or offer with intent to cancel before the orders are filled. The flurry of activity around the buy or sell orders is intended to attract other traders to induce a particular market reaction such as manipulating the market price of a security. In all financial markets today a majority of orders were spoofing orders and are canceled before they are executed. However, those orders do not officially exist as they are not reported or disclosed to other traders.

Spoofing can be a factor in the rise and fall of the price of shares and can be very profitable to the spoofer who can time buying and selling based on this manipulation. Under the current US laws, spoofing is "the illegal practice of bidding or offering with the intent to cancel before execution." Spoofing is often associated with high-frequency trading which can be very profitable for the exchanges and broker-dealers as they make huge profits from the HFT and algorithmic trading.

PoET addresses this problem by recording all orders sent, not only the small fraction of executed orders. Every time an order is sent, it records its wallet address, time (accurate to a nanosecond), quantity, price, instrument, account/wallet ID, exchange(s) it was sent to.

The same is also recorded on the distributed ledger technology (DLT) whenever an order is canceled: Its original wallet address, time, quantity, price, instrument, account/wallet ID, exchange(s).

PROOF OF ALL TRADES

Preventing Front Running

Front-running is the prohibited practice of entering into an order to capitalize on an advance, non-public knowledge of a large pending transaction that will influence the price of the underlying security. This is considered a form of market manipulation in many markets. Cases typically involve individual brokers or brokerage firms trading stock in and out of undisclosed, unmonitored accounts of relatives or confederates. Institutional and individual investors may also commit a front-running violation when they are privy to inside information. A front-running firm either buys for its own account before filling customer buy orders that drive up the price or sells for its own account before filling customer sell orders that drive down the price. Front-running is prohibited since the front-runner profits from nonpublic information, at the expense of its own customers, the block trade, or the public market.

PoET records all transactions occurred on the network on an immutable public ledger. Every time an order is executed, it records its wallet address, time (accurate to a nanosecond), quantity, price, instrument, account/wallet ID, and exchange(s). 

SOFTWARE DEVELOPMENT

PoET is a public DLT protocol. It is an open-source software and will remain in the public domain, managed by IOB LLC and hosted on Github, free of charge for public data access. IOB is committed to continued development and investments in improving the technology of the protocol. We are responsible for the upgrade and maintenance of PoET and welcome both institutional trading companies and individual coders to participate in the open-source software updates, version upgrades, and auditing.

The ongoing software development of PoET protocol is the responsibility of IOB Mesh Technology GmbH. R&D activities are centered around DLT protocol technology development, multi-chain interoperability, data cryptography, data compression, on-chain, and off-chain data block hashing and data storage technologies. The initial activities are software development only, and as the project scale increase in exponential sizes, hardware technology development may become a necessary part of the IOB Mesh team's R&D focus.

IOB Analytics

Deriving vast data from PoET, IOB performs data analyses through deep learning artificial intelligence. IOB Analytics is a suite of financial market intelligence products and a real-time trading advisory service for stock, commodity futures, and cryptocurrency traders. A vast amount of real-time level-2 market data is derived through PoET. IOB develops proprietary market data analytics tools for Market Correlation Identification, Cancelled Order Index, Manipulative Order Indicator, and Arbitraging Signals.

PRODUCTS AND SERVICES

IOB Analytics Products

IOB Market Analytics Products provide deep market intelligence to both traditional financial market traders of stocks, commodity futures and index futures, and crypto token traders.

Although market intelligence services via the electronic delivery are in existence by service providers such as Dow Jones, Bloomberg, and Reuters for decades in the traditional markets, there are a few quality market trading data and intelligence products and service providers in the crypto trading space. Furthermore, no one is providing products and services that give traders a clear view of the ongoing market manipulative orders.

The addressable market is billions of dollars in annual sales volume, and we are already talking to several high net worth traders, family offices and institutional traders in Asia, North America, and Australia.

Initially, in order to create an IOB Token ecosystem, we will only make our products available to institutional subscribers who can meet the minimal Qualified Reserve requirement (500,000 IOB Tokens).

IOB Analytics Services

IOB Market Analytics Services provide traders near real-time Active Order Book Advisory (AOBA) Services on IOB Smart Trading System. It adds a dynamic markup layer showing on the existing exchange-provided level-2 order book with proprietary indicators for Market Correlation Identification, Cancelled Order Index, Manipulative Order Indicator, and Arbitraging Signals.

Market Analytics and Market Intelligence products are sold to clients through subscription packages.

SOFTWARE DEVELOPMENT

IOB Analytics R&D are based on hands-on trading and portfolio management feedback. With constant real-world trading data demand from IOB Mesh's sister companies and strategic partners, the Cologne team focuses its Market Analytics development on advanced artificial intelligence technologies and machine learning algorithms. Another area of focus is the financial data delivery technology that addresses the mission-critical data delivery efficiency and reliability. The Market Analytics product packages and services are therefore delivered to subscribers in real time.

IOB Smart Trading™

Smart Trading™ System (STS) consists of a suite of proprietary algorithmic trading strategies, portfolio management tools, and risk control methods to take advantage of the highly volatile crypto markets and to hedge the existing crypto holdings with both long and short positions. IOB plans to manage its own money based on IOB trading algorithm strategies, which are fully automated.

The STS is available for qualified professional traders who want to take advantage of cryptocurrency trading markets and is offered to our institutional clients and through partnerships with broker-dealers in the US, Europe, Australia, and Asia.

With its top management coming from years of high-frequency trading (HFT) and quantitative trading in stocks, commodity futures and index futures around the world, IOB develops its own proprietary trading systems consisting of Decision Engines, Order Flow Management, Risk Control, Position Sizing, Market Info™ connectivity modules, and certain proprietary hardware.

MAIN FEATURES

  1. Strategies and portfolio management tools for professional traders;
  2. Integrating and partnering with traditional financial firms, hedge funds, broker-dealers;
  3. Driving traffic to the major exchange partners;
  4. Automated trading strategies for trading long and short;
  5. Open trading strategy platform;
  6. Institutional portfolio management platform;
  7. Institutional risk control platform;
  8. Proof of Enquiries & Trades (PoET) on DLT;
  9. Subscription fee- and network fee-based service model;
  10. Building the IOB Ecosystem.

DEVELOPMENT ROADMAP

There are several steps to Smart Trading™:

  1. As of now, setting up Tier-1 accounts with various exchanges as a Market Maker, transporting our commodity futures trading system which the founders have been using and developing since 2012 to the account;
  2. Q1 2019: Change the .exe system to a browser-based UI, opening up to 20 trading strategies to the beta testers. Strategies are not trading systems until they all have Portfolio Management, Risk Control, and Trading Goal Balancer all built in;
  3. Q2: Open platform development: With open API, we will allow traders to build their own strategies without coding skills;
  4. Q3: Social Trading: Top traders (and anyone) can open up their own trading on a smart contract to let others mirror their every trades and risk control settings automatically, for free, for a per-trade fee, for a subscription fee, or for a % of profits in certain time frames... All done without the control of IOB.

PROPRIETARY TRADING MANAGEMENT

IOB LLC manages its own capital using the STS at its headquarters in the USA. A new New Jersey (IOB NJ) branch office is currently being set up.

SOFTWARE DEVELOPMENT

  1. IOB founders have been developing and owned quantitative trading systems since 2012. IOB NJ will be responsible for continuing algorithmic trading software development;
  2. The new DLT functionalities of IOB Smart Trading™ is being developed by IOB Cologne for the implementation of PoET protocol on Smart Trading™ System.  

Create The IOB Token Ecosystem

Aiming to eliminate all commission-based transactions, IOB LLC is creating an IOB Token ecosystem where services and products are powered by the IOB Token.

The IOB Token is used in venture investing as tokenized capital. Professional traders are qualified in part by staking their IOB Tokens to have access our market intelligence analyses, professional trading algorithms, portfolio management tools, and risk control system. The IOB Token Ecosystem will also include a peer-to-peer distributed exchange service platform, and a complete investment banking system built on the IOB Mesh Network in the future.

The IOB token plays several roles:

  1. Represents the tokenized investment capital for portfolio company equity investments.
  2. PoET Market Analytics subscription qualified reserve.
  3. Smart Trading™ and SmX™ reserve and subscription fees and network transaction fee plan.
  4. Provides a reward mechanism on the IOB Social Investment Platform.
  5. Functions as a qualified reserve requirement for the members of the International Regulated Exchange Network (IREN).
  6. Functions as the fundamental unit of account on the ONE Finance World Mesh (IOB Mesh Network). The use of bi is the gas that powers all financial transactions worldwide on the network. Furthermore, IOB tokens are a liquid currency, and therefore can be bought or sold on exchanges, as well as transferred to other users as a form of payment.

The qualified reserve and network transaction fees alone will create a 400-million IOB Token ecosystem.

IOB SMART VC™

IOB invests in startups, with a focus on regulated financial, legal, accounting, tax services companies and dApps developers with the help of our Social Investment Platform (SIP).

We moved our entire investment business on DLT. It improves the old VC model by:

Currently, we have:

Investing Activities

The IOB investments are managed by IOB LLC in North America and are aided by IOB Shanghai Ltd. (IOB Shanghai).

Portfolio Companies Owned

IOB SMART EXCHANGE (SmX™)

Built on the Smart Trading™ platform, IOB Smart Exchange (SmX™) is a P2P exchange for professional, experienced and high volume traders. SmX™ has Arbitraging and position trading strategies built in for qualified institutional traders. Traders can also develop and share their own trading strategies on SmX™.

Aside from its initial KYC/AML processing, traders are required to hold a certain amount of IOB token to be qualified.

The SmX™ is designed for institutional traders who want to shield their trades away from the watchful eyes of the other speed traders. It is designed to complement other centralized exchanges for our traders’ needs and drive certain trading traffic and volume to partner exchanges. It is not meant to replace any high-efficiency centralized exchanges.

IOB SmX™ aims to offer

Main Features

  1. For professional traders;
  2. Partners with major crypto exchanges, traditional financial firms, hedge funds, broker-dealers;
  3. Complementing, not competing with the major centralized exchange partners to serve our clients.
  4. Automated trading strategies for trading long and short;
  5. Proof of Enquiries & Trades (PoET) on DLT;
  6. Subscription fee-based service model;
  7. Building the IOB Ecosystem.

Instant Fund Transfers and Trade Settlements

Not Profiting From The Delayed Settlement and Clearing

Currently, when funds are transferred, many financial institutes remove a client’s funds from their account balance immediately while holding the funds in its own pool during the settlement and clearing process that can take several days via an Electronic Settlement. The interest payment to this balance of funds is not credited to the client but kept by the institution. If there are fees incurred or financial penalties associated with the delayed settlement, the client’s financial losses are further compounded.

The PoET protocol enables an automated instantaneous trading settlement mechanism. The PoET smart contract directly swaps cash and assets from buyers to sellers, resulting in instant settlements.

Giving Back to Traders The Complete Control of Funds and Assets

Hundreds of millions of dollars worth of cryptocurrencies were hacked through centralized exchanges.  The PoET protocol enables cryptocurrency trading without the need to trust or rely on a third-party. It uses a hash time-locked contracts (HTLCs) to allow both parties to trade their cryptocurrency directly with each other without having to trust one another or a third party. It is an effective way of removing trust from the equation and thus makes trading cryptocurrency safer as the funds and assets are controlled by the traders themselves.

Software Development

IOB Cologne will start developing SmX™ exchange software on the PoET protocol in Q1, 2019.  

Business Development

Business development and corporate client relations will be handled by IOB regional offices. IOB NJ will be responsible for the North American market. IOB Shanghai will be in charge of the Pacific Asia market, while IOB Cologne will have a dedicated business development team for the European market.

IOB SOCIAL INVESTMENT PLATFORM (SIP)

All of our investment and trading segments are interwoven together by our online and offline social network, an interactive community on DLT.

Through our team’s constant engagement online and offline we built an active community where members act as analysts on the Social Investment Platform (SIP). IOB token rewards act as incentives to increase Reputation Score, which is based on the value of contributions to IOB investment or management decisions. It will be determined by Crowd Wisdom Bots (CWBs) through a matrix of parameters such as quality content authoring, upvotes, shares, views, and the user’s past feedback accuracy and viability.

The IOB tokens are used as a DLT-enabled cryptocurrency reward ecosystem: members will have proven public track records of contributions and reputation rewarded with a real monetary value from IOB.

Software Development

  1. DLT Technology: IOB Cologne;
  2. User Interface: IOB Shanghai;
  3. The Crowd Wisdom Bots (AI): Currently outsourced.

Data Analyses & Maintenance

A Market Intelligence team will be built at IOB Shanghai in Q1, 2019, to perform ongoing data analysis tasks and system maintenance.  

LONG-TERM DEVELOPMENTS

The International Regulated Exchange Network (IREN)

IOB is building an international business alliance to develop a network of regulated exchanges. IREN will bring licensed trading of security tokens to the marketplace and enable exchange clients to receive an appropriate level of service and protection.

We invest in licensed trading platforms and are in talks with several active exchanges in Asia and Europe to build a tokenized future and in turn, they are interested in joining our network and bringing in their daily trading volume that runs into hundreds of millions of dollars (USD).

The IOB tokens will be used as one of the ‘reserve required assets’ for all IREN member exchanges.

One Finance Network (The IOB Mesh)

We are building a new open-source, permissioned and secure decentralized and distributed global public finance DLT that over time will be transformed into a world mesh system for all forms financial transactions: Equity issuance, debt issuance, P2P, corporate finance, investment banking, equity trading, debt trading, crypto trading, loan originating, trading clearing, custodial services etc. All are on the public ledger through the most comprehensive financial smart contracts.

By partnering with top technology companies, investing in regulated financial companies, law firms accounting and other compliance-related firms worldwide, and help them build applications on the Mesh, we are enabling all financial transactions on the distributed ledger with full local and international compliance, at a fraction of the time and cost compared with the current financial system.

The ONE Finance Network enables a commission-less financial network. The only cost of a financial transaction, from small p2p payments to multimillion-dollar investment banking deals, is the Network Transaction Fee, which is shared automatically via smart contracts among all the dApp contributors and nodes. The network transaction fee is powered by the IOB token.

The Same Token, Multiple Offerings (STMO)

SECURITY TOKEN MULTIPLE OFFERINGS

IOB token constitutes an investment contract, where the main use-case and the reason for the contributors to buy tokens is the anticipation of future profits in form of dividends, revenue sharing or price appreciation. IOB security token will still feature significant “utility” attributes; it will still be used in native transactions on our Social Investment Platform (SIP), International Regulated Exchange Network (IREN) and The ONE Finance Network (the Mesh, 1fin.network).

IOB pioneers a The Same Token, Multiple Offerings and Listing strategy to help promote an international security token standard for the future.

We will have multiple offerings in several countries and at a different time interval. The amount and each “hard cap” during each phase to be raised depends on the demand for the investment projects and what the business needs at that time.

So far IOB has issued approximately 8 million IOB Tokens. The most recent (June 2018) ICO plan is issuing $9 million with an estimated total circulation of 11 million IOB Tokens in 2018.

We completed our pre-sale at the end of 2017 at $1 per IOB Token.

GERMAN BAFIN FILING

Prospectus filing for an IPO approval. Planned price: $3-3.5/token.

US SEC FILING

Reg A+ and Reg S filing for a unregistered security offering exemptions. Planned price: $3.5-4.5/token.

The Technologies

IOB is a high-tech, DLT-based financial company setting out to change both the technology and the financial world.

We develop technology in both software with various applications and trading hardware optimization with our own intellectual properties (IPs).

Universa DLT is our partner for the multi-chain framework development.

BEYOND BLOCKS AND CHAINS

We will evolve and advocate decentralized commerce. As distributed ledger becomes part of everyday life, it will continue to evolve. We are already seeing moves away from ‘stacking blocks’ to systems which promise quantum resistance and a nonlinear mesh of linked transactions. The opportunities this can present to IOB and our partner companies in the continued transformation of archaic business models can only be realized if we invest and participate in the global conversation.  IOB leadership are already participating in ‘constructive disruption’ and will be active participants in the creation of new value models which are fair and equitable.

As DLT technology evolves, it is likely that linear blocks will not be needed. In its place, there could be a system where transactions are linked together and can confirm previous transactions. As the decentralization becomes more and more functional, the chain would not be a single directional string of blocks. We could have a non-linear mesh that goes in several different directions, where many parallel transactions are happening on different layers.

OPEN SOURCE

Proof of Enquiries & Trades (PoET)

DLT Platform

IREN

IOB Mesh

PROPRIETARY

Smart VC

Smart Trading™

Smart Exchange for Quantitative and Algorithmic Traders

The Team

Yale ReiSoleil

Co-founder, Chairman & CEO of IOB LLC, USA

Yale started his financial market career in 1996. Yale was a publicly-traded mutual fund manager and currently co-manages Sichuan Hongjian Fund, a ¥20 billion acquisition fund, and a cross-border high technology venture capital fund based in China. Being qualified for several US financial licenses, Yale has a healthy dose of ‘fear’ (and respect) for financial regulations.

Through a personal investment in a high-frequency trading (HFT) firm and established the first trans-Pacific trading data direct-feed fiber optic line between New Jersey and Shanghai in 2012, Yale has gained a deep understanding of the global electronic market technical infrastructure, and has identified the ‘trading signatures’ of the top HFT firms in the world. As CEO and Chief Investment Officer (CIO), Yale developed several proprietary quantitative trading systems with over a dozen position and hedging trading strategies built on proprietary software and hardware developed in-house. Being a speeder trader himself, Yale understands well many of the tricks and pockets of unfairness in the current financial markets.

Yale first read the Bitcoin whitepaper in 2013. Deeply impressed by it but was not smart enough to invest at that time. Yale started buying and holding Bitcoin after it first reached $430, and Etherium around $8, after he published an article on Steemit titled “bitcoin goes to US$50,000 – 1,000,000 in 10 to 20 years!

Yale writes a blog series on “The Trading Basics Everyone Should Know” at https://iob.vc/about/blog/.

Uwe Zimmer

Co-founder & Board Director, Germany

With more than 30 years of financial market experience, Uwe is a veteran in the asset management industry. He has built up his vast expertise at Prudential Securities, as a director of Hypo Capital Management and at BB-PrivatFinanz-Service GmbH. In 1998 he founded Meridio Asset Management AG, which he successfully managed as the CEO through several bull and bear markets. In 2016 he left the market-listed company to start the Robo Advisor Fundamental Capital and z-invest GmbH which offers digitizing advisory services for the financial industry. Since 2012 Uwe has experience in the cryptocurrency market.

Amit Srivastava

Vice President & Portfolio Manager, US

Amit is Senior Partner at Cycle Capital and Senior Portfolio Manager at Qingdao High Technology Equity Investment Fund. He has more than 30 years in operational, Venture Capital, cross-border transactions and fund management in high tech companies. He is also CEO of Entrepia Ventures.

Amit holds an MBA from the Wharton School of the University of Pennsylvania.

Simon Telfer

Board Director, UK

Simon is a Technology Evangelist with 30 years’ experience delivering large technology transformation programmes in a range of industries from media, to retail and public sector.  Simon has worked in CGI,  Accenture, and EDS where he claims to have always been an ‘executive geek’, remaining true to his engineering background and striving for simple, innovative disruptive solutions. Over the past year, Simon has taken a hands-on interest in the power of DLT technology working across a number of volunteer startups and community projects.

Alexander Borodich

Board Director, Russia

Alexander Borodich is a pioneer in the fields of innovation and DLT world. Alexander was named "The Most Active Business Angel in Russia" by Russian Venture Company. He is Chief Dream Officer and Managing Partner of Marketing Communication Agency Future Action, founder of VentureClub.co, the fifth largest crowd-investing platform in Europe, and founder of Russian Cryptocurrency and an investor in more than 70 projects.

DW*

Lead Developer, HFT Trading, US

DW holds a Doctor of Philosophy in Computer Science. He has more than 10 years’ experience in High-Frequency Trading and Quantitative Trading platform design, and his expertise is mainly in trading platform software/hardware design, trading network design, and trading strategy design and implementation. The trading systems designed by him are running in dozens of main stocks and futures exchanges in North America, Europe, and Asia.

DW was the ‘Unofficial World Champion of Financial Data Processing Speed Competition’ in 201x.

* Anyone like him in the HFT field is a little too sensitive to be known publicly.

Bruno Maumené

Advisor, Business Development

Bruno started his professional life as a Publisher in the field of Economics initially in Switzerland, and subsequently in South-East Asia and South America.

He is a co-founder of Screener.com SA, a financial analysis company. In 2004, he joined Fundo and was actively involved in developing the company’s quantitative risk-management tools. From 2008 to 2012, he sat on the Foundation Management Board of the Prisma, a Swiss investment foundation based at Vevey.

Bruno Graduated with degrees in Arts and Economics from the University of Geneva.

Corporate Information

The Issuer was organized under the laws of the State of Delaware on January 18, 2018. The address of the Issuer is 1013 Centre Road, Suite 403-A, Wilmington, DE 19805, USA. The Issuer’s website is located at https://iob.llc. The information contained or linked on the Issuer’s website is not incorporated by reference into this offering memorandum and is not a part of this offering memorandum.

REISOLEIL MCAFEE ZHU VENTURES LLC (“RMZ”)

The IOB Token was formerly known as the McAfee Coin after Yale ReiSoleil set up ReiSoleil McAfee Zhu Venture LLC (“RMZ”). RMZ was organized under the laws of the State of Delaware on July 12, 2017. RMZ had no prior operating history and was managed by its officers and members. All members of RMZ forfeited all his claim and interest in RMZ.

RMZ held pre-sale of McAfee Coin (MCF) through a KYC whitelist and a Simply Agreement of Future Token (SAFT) offering agreement on https://mcafeecoin.com that ended on November 30, 2017. On January 18, 2018, all funds and assets from RMZ were transferred to IOB LLC.

McAfee Coin was rebranded into IOB token. All presale investors were offered a full voluntary refund for the name change. The remaining investors have been issued a new IOB presale Official Statement.

FULLY-OWNED SUBSIDIARIES

IOB LLC currently has two fully owned subsidiaries.

  1. IOB Shanghai Ltd. (IOB Shanghai): IOB Shanghai was incorporated under the laws and regulations of the Shanghai Free-trade Zone on May 7th, 2018. The company registration number is 91310115MA1K434C0T. The address of IOB Shanghai is Suite 333, Sector 4, Building 1, No. 2001, Yanggao Road (N), Shanghai, China. To simplify the incorporation process by the local regulations, the company is registered to its Nominated Shareholder Yale ReiSoleil. Yale ReiSoleil owns 100% of the shares of IOB Shanghai on behalf of IOB LLC.
  2. IOB Mesh Technology GmbH (IOB Cologne): IOB Cologne was incorporated under the laws and regulations of Germany on May 24th, 2018. The company registration number is Court of Cologne, HRB: 95152. The address of IOB Cologne is Hildepoldplatz 15-17, 50672 Cologne, Germany.

IOB Financial Projections and Token Economics

2019-21 NUMBER OF QUALIFIED IOB TOKEN RESERVE

2018

2019

2020

2021

Market Analytics Subscription

0

$10,000,000

$80,000,000

$250,000,000

Trading Reserve

0

$5,000,000

$40,000,000

$150,000,000

SmX Reserve

0

$2,500,000

$8,000,000

$25,000,000

Staking Node Reserve

0

$0

$6,000,000

$12,500,000

Tech Node Reserve

0

$0

$2,800,000

$6,250,000

Service Node Reserve

0

$0

$14,000,000

$62,500,000

Total

0

$17,500,000

$128,000,000

$425,000,000

IOB 2018-21 REVENUES

2018

2019

2020

2021

Venture Investment

$0

$1,060,000

$1,950,000

$4,350,000

IOB Analytics Subscriptions

$0

$3,088,000

$13,092,000

$78,120,000

Exchange Packages

$0

$3,750,000

$28,080,000

$35,400,000

Smart Trading

$0

$960,000

$8,604,000

$49,932,000

SmX Network Fees

$0

$0

$6,171,429

$26,766,667

IOB Mesh Network Fees

$0

$0

$0

$19,444,444

Total

$0

$8,858,000

$57,897,429

$214,013,111

 

* We anticipate that our near term revenue driver, Exchange Packages, will be flattened or even decline in 3-4 years, while IOB Analytics and Smart Trading take the lead. The biggest revenue sources after 2022 will be from SmX and IOB Mesh.

IOB TOTAL TOKEN ISSUED

2017

2018

2019

2020

2021

IOB Token Issued

1,773,425

11,757,359

32,203,788

44,770,454

57,426,704

IOB TOTAL TOKEN ALLOCATION

%

Max Tokens Can Be Issued

Pre-sale

0.18%

1,773,425

1st Strategic Investor Offering

0.80%

8,000,000

2nd Strategic Investor Offering

0.86%

8,571,429

Germany TAO

0.83%

8,333,333

US TAO

0.57%

5,714,286

3nd Strategic Investor Offering

0.50%

5,000,000

Founder

20.00%

7,478,495

Team

10.00%

3,739,247

Social Investment Network rewards

5.00%

1,869,624

Advisory & Partners

5.00%

1,869,624

Investors' Bonuses

3.00%

1,121,774

Company Reserve

53.26%

946,528,764

Total

100.00%

1,000,000,000

IOB 2018-2020 FUNDING

%

2018-2019 Funding

Revenue

8.70%

$8,858,000

Pre-sale

4.91%

$5,000,000

1st Strategic Investor Offering

7.85%

$8,000,000

2nd Strategic Investor Offering

14.73%

$15,000,000

Germany TAO

24.54%

$25,000,000

US TAO

19.64%

$20,000,000

3nd Strategic Investor Offering

19.64%

$20,000,000

Total

100.00%

$101,858,000

IOB 2018-19 USE OF FUNDS

%

2018-19 Use of Funds

Sales & Marketing

1.24%

$1,264,953

R&D - PoET

2.21%

$2,255,138

R&D - IOB Analytics

2.31%

$2,356,673

R&D - Exchange Packages

1.70%

$1,729,211

R&D - Smart Trading

2.07%

$2,110,252

R&D - SmX

0.40%

$403,021

Portfolio Company Investments & Acquisitions

14.18%

$14,445,667

Outside Legal

0.36%

$368,000

Accounting & Auditing

0.08%

$77,000

Advisory

0.17%

$177,160

Total

$25,187,075

IOB 2018-20 PORTFOLIO FUNDING BREAKDOWN

2018-19 Portfolio Company Funding Breakdown

Fundamental Capital

$600,000

Kession Capital

$700,000

XMED

$200,000

WITEE

$600,000

Venture Investing

$9,000,000

Total

$11,100,000

IOB LLC Financial Projections

IOB LLC

Summary

Years 1 to 5

2017

2018

2019

2020

2021

Summary Financials ($)

Revenue

0

0

8,858,000

57,897,429

214,013,111

Gross Profit

0

0

8,848,000

57,877,429

210,800,085

EBIT

(42,914)

(664,162)

(5,656,710)

12,347,721

76,095,896

EBITDA

(41,381)

(655,962)

(4,305,177)

20,774,388

100,072,562

Net Earnings

(42,914)

(664,162)

(5,649,710)

9,984,947

46,161,537

Net Cash from Operating Activities

(41,381)

(655,962)

(5,503,574)

14,531,300

56,031,218

Capital Expenditures

4,600

20,000

4,100,000

21,300,000

46,740,000

Interest Income/(Expense)

0

0

7,000

56,000

840,000

Dividends

Cash

4,019

7,328,058

95,224,484

216,455,784

650,747,003

Total Equity

7,086

(657,076)

(6,306,786)

3,678,161

49,839,698

Total Debt

0

0

0

0

0

Growth

Revenue Growth Rate - CAGR:

554%

270%

Net Earnings Growth Rate - CAGR:

1447.6%

750.7%

Nil

362.3%

Ratios

Current Ratio

1.5

1.2

1.1

Debt to Capital (LT Debt + Equity)

0.0

0.0

0.0

0.0

0.0

Profitability

Gross Profit %

99.9%

100.0%

98.5%

Operating Expenses %

163.7%

78.6%

62.9%

Net Earnings %

-63.8%

17.2%

21.6%

Returns

Return on Assets

-605.6%

-9.0%

-5.6%

4.1%

6.2%

Return on Equity

-605.6%

-9.0%

-15.4%

21.4%

49.7%

Return on Capital (LT Debt + Equity)

-605.6%

-9.0%

-15.4%

21.4%

49.7%

INCOME STATEMENT

Years 1 to 5

($)

2017

2018

2019

2020

2021

NET REVENUES

0

0

8,858,000

57,897,429

214,013,111

COST OF REVENUE

0

0

10,000

20,000

3,213,026

% of Revenues

0.11%

0.03%

1.50%

GROSS PROFIT

0

0

8,848,000

57,877,429

210,800,085

% of Revenues

99.9%

100.0%

98.5%

OPERATING EXPENSES

Sales & Marketing

0

6,325

1,258,628

6,931,795

26,432,208

Research & Development

73,600

345,275

8,105,999

20,903,459

61,585,476

Financial Operations

0

0

706,444

2,709,119

7,971,661

General and Administration

67,514

362,562

4,433,639

14,985,335

38,714,844

Total Operating Expenses

141,114

714,162

14,504,710

45,529,708

134,704,189

% of Revenues

164%

79%

63%

EARNINGS FROM OPERATIONS

(141,114)

(714,162)

(5,656,710)

12,347,721

76,095,896

EXTRAORDINARY INCOME / (EXPENSE)

98,200

50,000

0

0

0

EARNINGS BEFORE INTEREST & TAXES

(42,914)

(664,162)

(5,656,710)

12,347,721

76,095,896

INTEREST INCOME / (EXPENSE)

0

0

7,000

56,000

840,000

NET EARNINGS BEFORE TAXES

(42,914)

(664,162)

(5,649,710)

12,403,721

76,935,896

TAXES

0

0

0

(2,418,774)

(30,774,358)

NET EARNINGS

(42,914)

(664,162)

(5,649,710)

9,984,947

46,161,537

% of Revenues

-63.8%

17.2%

21.6%


BALANCE SHEET

Years 1 to 5

($)

Begin

2017

2018

2019

2020

2021

ASSETS

CURRENT ASSETS

Cash

50,000

4,019

7,328,058

95,224,484

216,455,784

650,747,003

Accounts Receivable

0

0

1,588,062

6,753,156

25,698,694

Inventories

0

0

1,281,930

5,585,944

21,795,095

Other Current Assets

0

0

191,333

833,723

3,252,999

Total Current Assets

50,000

4,019

7,328,058

98,285,809

229,628,607

701,493,791

PROPERTY & EQUIPMENT

0

3,067

14,867

2,763,333

15,636,667

38,400,000

TOTAL ASSETS

50,000

7,086

7,342,924

101,049,142

245,265,274

739,893,791

LIABILITIES & SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Short Term Debt (IOB Tokens Issued)

62,500,000

190,500,000

615,500,000

Accounts Payable & Accrued Expen

0

0

1,664,595

7,253,390

28,301,094

Other Current Liab

0

0

191,333

833,723

3,252,999

Current portion of long term debt

Total Current Liabilities

0

0

0

64,355,928

198,587,113

647,054,093

LONG TERM DEBT (less current portion)

TAOCKHOLDERS' EQUITY

Common Stock

50,000

50,000

50,000

50,000

50,000

50,000

Preferred Stock

0

0

8,000,000

43,000,000

43,000,000

43,000,000

Retained Earnings

(42,914)

(707,076)

(6,356,786)

3,628,161

49,789,698

Total Equity

50,000

7,086

7,342,924

36,693,214

46,678,161

92,839,698

TOTAL LIABILITIES & EQUITY

50,000

7,086

7,342,924

101,049,142

245,265,274

739,893,791


CASH FLOW

Years 1 to 5

($)

2017

2018

2019

2020

2021

OPERATING ACTIVITIES

Net Earnings

(42,914)

(664,162)

(5,649,710)

9,984,947

46,161,537

Depreciation

1,533

8,200

1,351,533

8,426,667

23,976,667

Working Capital Changes

(Increase)/Decrease Accounts Receivable

0

0

(1,588,062)

(5,165,094)

(18,945,538)

(Increase)/Decrease Inventories

0

0

(1,281,930)

(4,304,014)

(16,209,151)

(Increase)/Decrease Other Current Assets

0

0

(191,333)

(642,390)

(2,419,276)

Increase/(Decrease) Accts Pay & Accrd Expenses

0

0

1,664,595

5,588,794

21,047,704

Increase/(Decrease) Other Current Liab

0

0

191,333

642,390

2,419,276

Net Cash Provided/(Used) by Operating Activities

(41,381)

(655,962)

(5,503,574)

14,531,300

56,031,218

INVESTING ACTIVITIES

Property & Equipment

(4,600)

(20,000)

(4,100,000)

(21,300,000)

(46,740,000)

Other

Net Cash Used in Investing Activities

(4,600)

(20,000)

(4,100,000)

(21,300,000)

(46,740,000)

FINANCING ACTIVITIES

Increase/(Decrease) Short Term Debt

0

0

62,500,000

128,000,000

425,000,000

Increase/(Decrease) Curr. Portion LTD

0

0

0

0

0

Increase/(Decrease) Long Term Debt

0

0

0

0

0

Increase/(Decrease) Common Stock

0

0

0

0

0

Increase/(Decrease) Preferred Stock

0

8,000,000

35,000,000

0

0

Dividends Declared

0

0

0

0

0

Net Cash Provided / (Used) by Financing

0

8,000,000

97,500,000

128,000,000

425,000,000

INCREASE/(DECREASE) IN CASH

(45,981)

7,324,038

87,896,426

121,231,300

434,291,218

CASH AT BEGINNING OF YEAR

50,000

4,019

7,328,058

95,224,484

216,455,784

CASH AT END OF YEAR

50,000

4,019

7,328,058

95,224,484

216,455,784

650,747,003

* Tokenized Asset Offerings in 2019, 2020 and 2021 are treated as short-term debts per our currently filing with BaFin.

The IOB Token Structure

DESCRIPTION OF IOB TOKENS

The IOB Tokens are ERC20 smart contract digital tokens representing an indirect fractional non-voting economic interest in the Company. There is an aggregate number of up to 1,000,000,000 IOB Tokens offered in this Offering. The IOB Tokens are not, and do not represent or qualify as, a fund unit or structured product. The IOB Tokens have no equity, voting, management or control, distribution, preemptive or conversion rights. Redemption or buyback rights are only exercisable by the Issuer or the Company.

DISTRIBUTION POLICY

IOB Tokenholders will have no predefined and fixed distribution rights and may have conflicts of interest with the Issuer’s shareholder.” Returns of capital to IOB Tokenholders, if any, will occur through a series of irregular one-time distributions of dividends, open market purchases, a fixed price offer (as described above) or repurchases of IOB Tokens, all of which shall be effected in compliance with applicable law.

The software code of this smart contract is open-source and published at https://github.com/IOBteam/IOBToken.

NET CREATED VALUE DISTRIBUTION

Our primary mission is to create value for our token holders. There are two primary forms of distribution for value created by the Smart VC™ investment platform. These are the distributions of net-profits from tokens of our portfolio companies, and cash or equivalent distribution of generated revenues through trading, advisory services and network fee generated from SmX™, IREN, and IOB Mesh.

Over $2 million in dividend distribution has been made to IOB token holders.  

The Risk Factors

Investing in the IOB Tokens involves a high degree of risk and requires a long-term commitment, with no certainty of return of Tokenholder’s capital or any returns on their investment. You should carefully consider the risks with respect to the Issuer, the IOB Token, and cryptocurrency exchanges and the other information in the offering memorandum.

IOB TOKEN RISKS

No assurance of investment return

The company cannot provide assurance that it will be able to choose, make and realize investments in any particular company or portfolio of companies or in cryptocurrency investments.

Subject to significant transfer restrictions

The IOB Tokens have not been registered under the Securities Act, the securities laws of any state or the securities laws of any other jurisdiction and therefore cannot be resold, except as described in the section entitled “Transfer Restrictions” in the offering memorandum.

No existing trading market for the IOB Tokens and an active trading market may not develop

The IOB Tokens are a new issue of digital tokens for which there is no established public market. Although we intend to list the IOB Tokens on several cryptocurrency exchanges, there can be no assurance that such exchanges will accept the listing of IOB Tokens or maintain the listing if it is accepted. There can be no assurance that a secondary market will develop or if a secondary market does develop, that it will provide the holders with the liquidity of investment or that it will continue for the life of the IOB Tokens.

No liquidation rights

Upon a liquidation, bankruptcy or other dissolution of the Company, IOB Tokenholders will not be entitled to liquidation rights or other claims, although the Company and the Issuer intend to use commercially reasonable efforts to return any available proceeds following a liquidation, bankruptcy or other dissolution of the Issuer (or the Company, to the extent of Proceeds distributed to the Issuer) to IOB Tokenholders if such an event occurs. Furthermore, the Company has no fixed termination date.

Repurchase or redemption of IOB Tokens

The IOB Tokenholders do not have the right to compel the Issuer or the Company to redeem the IOB Tokens. The Company may, however, at its discretion purchase outstanding IOB Tokens from time to time and the Issuer has the option at its discretion to redeem IOB Tokens and purchase IOB Tokens in accordance with applicable law as described in this offering memorandum.

REGULATORY RISKS

Developing regulatory regimes

Regulation of tokens (including the IOB Tokens) and token offerings such as this, cryptocurrencies (including Ether), DLT technologies, and cryptocurrency exchanges are currently undeveloped and likely to rapidly evolve, and vary significantly among non-U.S. or U.S. federal, state and local jurisdictions and are subject to significant uncertainty. There can be no assurance that any new or continuing regulatory scrutiny or initiatives will not have an adverse impact on the value of IOB Tokens and otherwise impede the Issuer’s or the Company’s activities.

Tax risks

The tax characterization of IOB Tokens is uncertain and a subscriber should consult its own tax advisor regarding the consequences of an investment in IOB Tokens. Each potential subscriber should consult with and must rely upon the advice of its own tax advisor with respect to the United States and non-U.S. tax consequences of an investment in IOB Tokens.

Non-U.S. investments

The Company may invest outside of the United States. Non-U.S. securities involve certain factors not typically associated with investing in U.S. securities, including risks relating to (i) currency fluctuations and associated conversion costs; (ii) differences between the U.S. and non-U.S. securities markets, including volatility in and relative illiquidity of some non-U.S. securities markets, the absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements and less government supervision; (iii) certain economic and political risks, including potential restrictions on non-U.S. investment and repatriation of capital and the possibility of expropriation or confiscatory taxation; and (iv) the imposition of non-U.S. withholding or other taxes with respect to such investment.

Lack of registration of the IOB Tokens or the Issuer, the Management and the Company

None of the Management, the Issuer, the Company, Argon Advisors or their affiliates or this Offering is currently registered under (1) the U.S. Investment Advisers Act of 1940, as amended (the “Advisers Act”), (2) the Investment Company Act of 1940, as amended (the “Investment Company Act”), (3) the Securities Act, (4) the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), (5) the U.S. Commodity Exchange Act, as amended (the “CEA”) or (6) under any other applicable non-U.S. or U.S. international, federal or state securities, commodity, derivative or other applicable legal or regulatory regime.

The Issuer and the Company rely on complex exemptions from regulation in conducting their activities

The Issuer and the Company regularly rely on exemptions from various requirements of the Securities Act, the Exchange Act, the Investment Company Act, and other applicable laws in various jurisdictions, in conducting the Offering and their business. These exemptions are sometimes highly complex and may in certain circumstances depend on compliance by third parties whom they do not control. If for any reason these exemptions were to become unavailable to the Issuer and/or the Company, they could become subject to regulatory action or third-party claims and their business could be materially and adversely affected. These regulations, if they become applicable to the Issuer or the Company, could limit the Issuer’s and/or the Company’s activities and impose burdensome compliance requirements.

Registration under the U.S. Commodity Exchange Act

Because the IOB Tokenholders do not have a direct financial interest in the Issuer and will not be sharing pro rata in the accrued profits and losses from the Company’s investments in any cryptocurrency derivatives or other “commodity interests” (as defined in CFTC regulations), there could be a basis, under relevant case law and CFTC staff interpretative guidance, for concluding that the Issuer is not itself a “commodity pool” and is not operating a “commodity pool.” Accordingly, the Issuer does not intend to register with the CFTC as a “commodity pool operator.” Given that the Issuer will not, for compensation or profit, be providing advice to the IOB Tokenholders or others regarding the advisability of trading in “commodity interests,” the Issuer also does not intend to register with the CFTC as a “commodity trading advisor.”

Compliance with the AIFM Directive

The European Union Alternative Investment Company Management's Directive (the “Directive”) took effect at a national level within the member states of the European Union (the “EU”) on July 22, 2013. Subject to the availability of any applicable transitional relief, the Directive will from this time impose new requirements on non-EU alternative investment Company managers (“AIFM”) which market alternative investment Funds (“AIF”) to professional investors within the EU.

Risk arising from potential control group liability

Under the Employee Retirement Income Security Act of 1974 (“ERISA”), upon the termination of a tax-qualified single-employer defined benefit pension plan, the sponsoring employer and all members of its “controlled group” will be jointly and severally liable for 100% of the plan’s unfunded benefit liabilities whether or not the controlled group members have ever maintained or participated in the plan.

ISSUER AND COMPANY RISKS

The Company’s investments will generally be private and may consist in part of illiquid holdings. As such, there may be no public markets for such securities or cryptocurrencies held by the Company and no readily available liquidity mechanism at any particular time for some or all of the investments or cryptocurrencies held by the Company. In addition, the realization of value from any investments will not be possible or known with any certainty until the Management elects, in its sole discretion, to sell the Company’s investments and subsequently distribute the proceeds to its subscribers or to distribute securities to subscribers in lieu of cash. Furthermore, given the Company’s investment strategy, there may be significant competition among the Company and other investors for a limited number of quality investment opportunities, which may result in the Company deploying capital in a manner less efficiently than anticipated and consequently potentially resulting in a negative effect on the Company and the IOB Tokens.

A highly-competitive market for investment opportunities

The activity of identifying, completing and successfully disposing of attractive investments is highly competitive and involves a high degree of uncertainty. There can be no assurance that the Company will be able to locate and complete investments that satisfy the Company’s objectives or realize their values, or that the Company will be able to fully invest its capital.

Non-control investments

The Company is expected to hold non-controlling interests in most or all of its portfolio companies and, therefore, may have a limited ability to protect its positions in such companies. In these cases, the Company will be significantly reliant on the existing management and board of directors of such companies, which may include representatives of other financial investors with whom the Company is not affiliated and whose interests may conflict with the interests of the Company.

Risks associated with ICOs

The Company expects to invest a large portion of its assets in ICOs. The Company’s investments in these assets may be very sensitive to movements in related markets and trends and ICO markets, including regulatory developments, enforcement actions, security concerns, and technological developments. In addition, by investing in such assets the Company may be subject to international, federal and state securities, commodity or other laws which may, among other things, restrict the Company’s ability to sell a portfolio investment and consequently adversely impact the value of its assets.

Investing in cryptocurrencies

As a general matter, the rate at which fiat currency can be exchanged into cryptocurrency is extremely volatile. Given that they are relatively new forms of currency based on new technology, and given their extreme price volatility, cryptocurrencies such as Bitcoin, Ether, and their respective networks are not widely accepted or utilized, and cryptocurrencies of all types are generally not accepted as a means of payment for goods and services by retail and commercial outlets. Banks and other established financial institutions may refuse to process Funds for cryptocurrency transactions, process wire transfers from cryptocurrency exchanges, or maintain accounts for persons or entities transacting in cryptocurrencies. A lack of expansion by Bitcoin or Ether into retail and commercial markets may result in further increased volatility or a reduction in value which could adversely impact an investment in the IOB Tokens. Volatility in the values of Bitcoin, Ether, and other cryptocurrencies can be significant, and a decrease in the value on these cryptocurrencies could indirectly have a material and adverse effect on the value of IOB Tokens.

The fundamental value of Bitcoin, Ether and other cryptocurrencies is sensitive to the subjective perception

The value of a cryptocurrency could be based on its ease of use, the energy used to mine it, what it can be used to purchase, or its revolutionary technology, but there is no underlying value or an institution supporting its value. This results in price volatility, which encourages the speculative behavior. Speculative subscribers may hold the cryptocurrency instead of spending it, which makes the currency illiquid. Furthermore, any particular cryptocurrency may become worthless, which could result in an adverse effect on the Company’s business.

A temporary or permanent DLT “fork” could adversely affect an investment in cryptocurrency

Funds submitted for subscription in an ICO may be stolen through hacking the system which could indirectly have a material and adverse effect on the value of IOB Tokens.

Investments in startups and early-stage companies with smaller capitalizations

Before deciding to purchase the IOB Tokens, a prospective subscriber should consider the risks and difficulties frequently encountered by early- to mid-stage companies in new and rapidly evolving markets, particularly those companies whose businesses depend on the Internet and DLT technology.  Management cannot assure prospective IOB Tokenholders that the Company’s or its portfolio companies’ business strategy will be successful or that its portfolio companies will address these risks successfully.

Implementation of the Management’s investment strategy

Although the Company and the Management currently intend to pursue the investment strategy as set forth in this offering memorandum, they may change any aspect of their strategy at their discretion at any time. Identification and exploitation of the investment strategies to be pursued by the Company involve a high degree of uncertainty. No assurance can be given that the Management will be able to locate suitable investment opportunities in which to deploy all of the Company’s capital.

Confidentiality: Adverse Publicity

While the Issuer believes the confidentiality of IOB Tokenholders will be protected, there is no certainty of this or that any adverse publicity attaching to the Company’s efforts to influence management will not have adverse consequences for IOB Tokenholders, as well as for the Company generally.

Ultimate Company Size

The number of investments and potential profitability of the Company could be affected by the number of Funds at its disposal, and, in the event the Company obtains less than the target amount of capital for deployment, the Company’s investment return might be affected to a greater degree by errors in investment decisions than the investment returns of other entities with greater capitalization.

Other activities of the Management and its affiliates

The Management, certain of its personnel or affiliates may serve as investment manager, advisor and/or provide services for other Funds, Investment Funds and investment accounts, including those with substantially the same investment objectives as the Company’s (which may pursue their investment activities by contributing assets to the Company), and also including additional investment Funds and/or client accounts with investment objectives that differ in some respects to the Company’s investment objective. Neither the Management nor any of its personnel or affiliates is obligated to make any particular investment opportunity available to the Company, and they may take advantage of any opportunity, either for other accounts the Management, its personnel or affiliates manage or for themselves or other Funds they manage.

Reliance on portfolio company management teams

Although the Management will be responsible for monitoring the performance of each portfolio investment, there can be no assurance that the existing management team, or any successor, will be able to operate any such portfolio company successfully.

Investments with third parties

The Company may co-invest with third parties, thereby acquiring non-controlling interests in certain portfolio companies. The Company may not have control over these companies and, therefore, may have a limited ability to protect its position therein.

The material, nonpublic information

By reason of its investment in a portfolio company or otherwise, the Management may acquire confidential or material non-public information or otherwise be restricted from initiating transactions in certain securities. The Company will not be able to act upon any such information. Due to these restrictions, the Company may not be able to initiate a transaction that it otherwise might have initiated and may not be able to sell a portfolio investment that it otherwise might have sold.

Illiquid and long-term investments

The Company may make investments that have limited liquidity. The market prices, if any, of such investments, tend to be volatile and the Company may not be able to sell such investments when it desires, or, upon sale, to realize what it perceives to be their fair value. Additionally, the Company may acquire securities that cannot be sold except pursuant to a registration statement filed under the Securities Act or in accordance with Rule 144 of the Securities Act or another exemption under the Securities Act.

A disruption of the Internet or the Bitcoin or Ethereum networks could impair the value and the ability to transfer Bitcoin or Ether respectively

A significant disruption in Internet connectivity could disrupt the Bitcoin or Ethereum network’s operations until the disruption is resolved, and could have an adverse effect on the value of the IOB Tokens. In addition, cryptocurrency networks have been subjected to a number of denial of service attacks, which led to temporary delays in transactions. It is possible that such an attack could adversely affect the Company’s investments and indirectly also the value of the IOB Tokens.

The Issuer and the Company are subject to cybersecurity and data loss risks or other security breaches

The Issuer’s and the Company’s business involves the storage and transmission of users’ proprietary information, and security breaches could cause a risk of loss or misuse of this information, and to resulting claims, fines, and litigation. The Issuer and the Company may be subjected to a variety of cyber-attacks, which may continue to occur from time to time.

Leverage

Certain of the Company’s portfolio companies may have capital structures with significant leverage. Consequently, the leveraged capital structure of such portfolio companies will increase their exposure to adverse factors such as rising interest rates, downturns in the economy or a deterioration in the business of a portfolio company or its industry, and may impair such companies’ ability to meet their debt obligations.

High yield and preferred securities

The Company’s investments may include “high yield” bonds, convertible and preferred securities that are rated in the lower rating categories by the various credit rating agencies or comparable non-rated securities.

Distressed securities

Certain of the Company’s assets may be invested in distressed securities. Investments in distressed securities involve acquiring securities of companies that are experiencing significant financial or operating difficulties and of companies that are, or appear likely to become, bankrupt or involved in a debt restructuring or other major capital transaction. Investment in distressed securities involves a high degree of credit and market risk.

Hedging policies/risks

The Company may employ hedging techniques, including, but not limited to, forwards, swaps, short sales and put and call options designed to reduce the risks associated with its investments including adverse movements in interest rates, securities prices, and currency exchange. While such transactions may reduce certain risks, such transactions themselves may entail certain other risks.

Swaps

Investments in swaps involve the exchange by the Company with another party of all or a portion of their respective interests or commitments. For example, in the case of currency swaps, the Company may exchange with another party their respective commitments to pay or receive currency. Use of swaps subjects the Company to risk of default by the counterparty.

Derivatives

The Company may invest in complex derivative instruments that seek to modify or emulate the investment performance of particular securities, commodities, currencies, interest rates, indices or markets or specific risks thereof on a leveraged or unleveraged basis which can be equivalent to a long or short position in the underlying asset or risk.

Futures

Futures markets are highly volatile. To the extent the Company engages in transactions in futures contracts and options on futures contracts, the profitability of the Company will depend to some degree on the ability of the Management to analyze correctly the futures markets, which are influenced by, among other things, changing supply and demand relationships, governmental policies, commercial and trade programs, world political and economic events and changes in interest rates. Moreover, investments in commodity futures and options contracts involve additional risks including, without limitation, leverage (margin is usually only 5-15% of the face value of the contract and exposure can be nearly unlimited) and credit risk vis-a-vis the contract counterparty.

Forward Trading

Forward contracts and options thereon, unlike futures contracts, are not traded on exchanges and are not standardized; rather, banks and dealers act as principals in these markets, negotiating each transaction on an individual basis. Forward and “cash” trading is substantially unregulated; there is no limitation on daily price movements and speculative position limits are not applicable.

Counterparty Risk

The Company is subject to various counterparty risks. For example, the Company may affect a portion of their transactions in “over-the-counter” or “interdealer” markets or through private transactions. The participants in such markets and the counterparties in such private transactions are typically not subject to credit evaluation and regulatory oversight as are members of “exchange based” markets. This may expose the Company to the risk that a counterparty will not settle a transaction because of a credit or liquidity problem, thus causing the Company to suffer losses.

Currency Trading Risk

The Company may engage in currency (including cryptocurrency) transactions to affect investment transactions to generate returns consistent with the Company’s investment objectives and strategies (i.e., speculative currency trading strategies) and/or to hedge against uncertainty in the level of future exchange rates.

Investment and Trading Risks

All investments risk the loss of capital and no assurance is made that the Company’s investment program will be successful.

Analytical Model Risks

The Company employs certain strategies which depend upon the reliability, accuracy, and analysis of the Management’s analytical models. To the extent such models (or the assumptions underlying them) do not prove to be correct, the Company may not perform as anticipated, which could result in substantial losses.

Risk of a limited number of investments

The Company may participate in a limited number of investments and, as a consequence, the aggregate return of the Company may be substantially and adversely affected by the unfavorable performance of even a single investment.

Contingent liabilities on the disposition of portfolio investments

In connection with the disposition of a portfolio investment, the Company may be required to make representations about the business and financial affairs of such company typical of those made in connection with the sale of a business.

Expedited transactions

Investment analyses and decisions by the Management may be undertaken on an expedited basis in order for the Company to take advantage of available investment opportunities. In such cases, the information available to the Management at the time of the investment decision may be limited, and the Management may not have access to the detailed information necessary for a thorough evaluation of the investment opportunity. Further, the Management may conduct its due diligence activities over a very brief period.

Reliance on the Management

Management has exclusive responsibility for the Company’s investment activities, and IOB Tokenholders will not be able to make an investment or any other decisions in the management of the Company or its portfolio companies.

Valuations

When the Company invests in illiquid tokens or instruments, it may be difficult for the Management to accurately determine the fair market value. Valuations of such assets for the purposes of determining the Company’s 7-day average price may be speculative and will depend largely on the Management’s judgment.

Broker, dealer or exchange insolvency

While great care is taken in selecting the brokers, dealers, exchanges or wallets that will maintain custody of certain of the assets of the Company, there is a residual risk that any of such persons could become insolvent or otherwise become insecure.

Risk of misconduct of employees and of third party service providers

Misconduct by employees of the Management or third-party service providers could cause significant losses to the Company. Employee misconduct may include binding the Company to transactions that exceed authorized limits or present unacceptable risks and unauthorized trading activities or concealing unsuccessful trading activities (which, in either case, may result in unknown and unmanaged risks or losses).

Future and past performance

Although the personnel of the Management has managed investment funds, the performance of these other funds and the prior results of such funds or their prior investments are not indicative of the results that the Company may achieve in the future.

The Management’s management personnel may manage other funds

In addition to managing the Company, the management personnel of the Management may also manage other investment Funds and devote time to other ventures in the future.

The Company’s investment returns will depend on its ability to manage future growth effectively

The Company’s ability to achieve its investment objective will depend on its ability to grow, which will depend, in turn, on the Management’s ability to identify, invest in, and monitor companies that meet the Company’s investment criteria. Accomplishing this result on a cost-effective basis will be largely a function of the Management’s structuring of the investment process, its ability to provide competent, attentive, and efficient services and access to financing on acceptable terms.

No assurance of the Management’s success in locating or investing in portfolio companies

There can be no assurance that the Management will be able to locate suitable investments for the Company. Although the Management will attempt to make investments on behalf of the Company which meets the criteria set forth in this offering memorandum, there is no assurance that such investments can be located.

No assurance of returns

There can be no assurance that IOB Tokenholders will receive value on redemption from the Company in an amount equal to their investment in the Company. The timing of profit realization, if any, is highly uncertain.

Reliance on the Management’s investment discretion for the Company

The Management will have sole discretion over the investment of the Funds committed to the Company as well as the ultimate realization of any profits. IOB Tokenholders will not receive the detailed financial information issued by portfolio companies that will be available to the Company.

Focused investment strategy

The Company will generally be focused on making strategic investments in digital tokens and actively managing digital tokens, cryptocurrency and other cryptocurrency investments (including derivatives linked thereto), although it may change its investment focus at any time without notice and without the consent of IOB Tokenholders.

Portfolio company turnover

Changes with respect to portfolio companies will be made as the Management considers necessary in seeking to achieve the Company’s investment objective. The rate of portfolio turnover will not be treated as a limiting or relevant factor when circumstances exist that are considered by management to make portfolio changes advisable.

Reserves

As is customary in the industry, the Company may establish reserves for follow-on investments by the Company in portfolio companies, operating expenses, the Company liabilities, and other matters. Estimating the appropriate amount of such reserves is difficult, especially for follow-on investment opportunities, which are directly tied to the success and capital needs of portfolio companies.

The lack of liquidity in the Company’s investments may adversely affect its value

The Company will primarily make investments in cryptocurrency, other appropriate investments related to digital tokens, cryptocurrencies and other cryptocurrency investments (and derivatives linked thereto). Substantially all of these assets have the potential to be subject to legal and other restrictions on resale or could otherwise be less liquid than publicly traded securities.

You may not have the skills necessary to secure, trade, or collect distributions using IOB Tokens

Participating in this Offering requires technical skill beyond that of many subscribers. Securing, trading or collecting distributions relating to IOB Tokens requires working knowledge of DLT technology, DLT assets, and their attendant systems and processes. Similar knowledge of DLT asset exchanges and other industry participants may be required.

The loss or destruction of a private key required to access DLT assets may be irreversible. The Company’s or your loss of access to private keys – or any other data loss concerning the Company’s DLT assets – could have a material adverse effect on its business or the IOB Tokens

DLT assets include, without limitation, Bitcoin, Ether, and other cryptocurrencies, IOB Tokens and other cryptographic IOB Tokens. DLT assets are controllable only by those who know the unique private cryptographic key relating to the network address at which DLT assets are held. The Company and the IOB Tokenholders are required by the operation of many DLT networks to publish the addresses concerning DLT assets in use by them.

The further development and acceptance of DLT networks, which are part of a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of DLT networks upon which the Issuer and the Company rely could have an adverse material adverse effect on each of them

The growth of DLT industry in general, as well as DLT networks on which the Issuer and the Company rely, is subject to a high degree of uncertainty.

The prices of DLT assets are extremely volatile. Fluctuations in the price of Bitcoins or Ether could materially and adversely affect the Company’s business

The prices of DLT assets are significant uncertainties for the Company’s business. The price of Bitcoin and Ether are subject to dramatic fluctuations.

The suitability of DLT networks on which the Issuer relies could decline due to a variety of causes, adversely affecting its business or the functionality of the IOB Tokens

DLT networks are based on software protocols that govern the peer-to-peer interactions between computers connected to these networks. The suitability of the networks for the Issuer’s and the Company’s business or the functionality of the IOB Tokens depends upon a variety of factors.