Crypto exchange startup INX Limited filed a preliminary prospectus outlining its plans to raise between $5 million and $129.5 million in an initial public offering (IPO), making it one of few cryptocurrency companies to seek a U.S. listing for its tokens through registration of a public offering.  INX filed a prospectus with the U.S. Securities and Exchange Commission (SEC) in August in anticipation of an offering of approximately 130 million INX security tokens.

Leveraging guidance recently published by the Strategic Hub for Innovation and Financial Technology (FinHub) of the SEC, the “Framework for ‘Investment Contract’ Analysis of Digital Assets,” INX intends to establish two trading platforms; one for non-security digital tokens and the other for security tokens.  When launched, the trading platforms intend to list security tokens, spot cryptocurrencies and eventually cryptocurrency derivatives.

According to the prospectus, INX security token holders will not have traditional equity in the issuing entity; rather, they will be entitled to an annual pro rata distribution of 40% of INX Limited’s net cash flow, which distributions will be payable on an annual basis commencing on April 30, 2021.  Once INX’s contemplated securities trading platform is operational, holders of INX tokens will also be able to use INX tokens to pay transaction fees on such platform; however INX tokens are not currently accepted as payment for any INX services.  Token holders will also and have preference over shareholders in the event of a liquidation.

INX included in its filing that it will not complete the sale of any INX security tokens unless it raises gross offering proceeds of $5 million within one year.  In the interim period between the IPO and achieving this $5 million threshold, subscription payments will be held in escrow by Metropolitan Commercial Bank, which payments will be returned to investors in the event INX fails to reach this minimum in the one year following the initial offering.  Until the $5 million minimum offering requirement is met, investors can pay for INX security tokens only in U.S. dollars; however once this threshold floor is achieved, investors will have the option to purchase tokens with Bitcoin and Ether.  INX reports that it plans to utilize proceeds from the IPO across company functions, including research and development, sales and marketing, regulatory and legal, and product development, among other expenses.

The INX prospectus must be declared effective by the SEC before INX can commence with its security token sale.  In addition, to operate its trading platforms, INX will be required to register as a broker-dealer, to join a self-regulatory organization, and register as an alternative trading system (ATS).  Further, to operate as a crypto exchange, INX will be required to obtain money transmitter licenses in each of the states in which it operates that consider cryptocurrency exchanges to be money service businesses.


Sam Kramer focuses his practice on multi-jurisdictional outsourcing, complex technology licensing, commercial contracting, and supply chain agreements and integration. He is frequently involved in outsourcing transactions and large scale IT services projects. Mr. Kramer also focuses on emerging technology services, including mobile virtual network operator (MVNO) transactions. He is the North American coordinator of the Firm’s MVNO practice.


Biography Amy Barber is a member of Baker McKenzie’s Privacy and Technology Practice Group in Chicago. Practice Focus Amy focuses her practice on regulatory and transactional issues in information technology and outsourcing, including cross-border data transfers, data security, global privacy, website privacy policies, behavioral advertising, and outsourcing for both domestic and multijurisdictional transactions. Admissions Illinois~United States (2018) Education University of Chicago Law School (JD) (2017) Montana State University (BA) (2011) Languages English