International internet venture investment and development firm Fatfish Internet Group Ltd (ASX: FFG) has entered into a legally binding term sheet to invest US$1 million of seed capital into early stage online virtual currency exchange Kryptos-X.
Kryptos-X was founded by renowned Australian entrepreneur Tony Mackay, who is the founding CEO and Chairman of Chi-X Europe and Global, the alternative stock trading platforms which operate across various international markets.
Kryptos-X is being established as an electronic marketplace for high-volume and high-frequency trading of bitcoin and other major virtual currencies online. Singapore has been chosen as the place of establishment for the exchange as it is a well-regulated environment which currently has two crypto exchanges, Coinhako and FYB-SG.
The proposed transaction will see FFG and Mr Mackay enter into a joint venture arrangement. FFG will be issued with preference shares in the capital of the holding company which will own and operate the electronic exchange and marketplace. FFG’s interest will be equivalent to 27% of the total voting shares on issue.
Following issue of the preference shares, FFG will be entitled to appoint two directors to the Board of Kryptos-X. Additionally, FFG has invited Tony Mackay to join its Board as a Non-Executive Director following the transaction. The parties will seek to enter into a formal joint venture agreement on industry standard terms.
To fund this proposed investment into Kryptos-X, FFG will seek to utilise existing cash reserves, funds from the proposed listing of its venture builder’s asset portfolio on NASDAQ First North exchange in Sweden and a possible future capital raising.
Kryptos-X operational plan
The operations of the electronic marketplace will initially be based in Singapore and open to Singapore citizens and residents. The strategy will be to expand into other jurisdictions where the regulatory frameworks permits the trading of cryptocurrencies online.
The electronic marketplace will deal exclusively with blockchain technology based digital tokens and cryptocurrencies that do not carry features of securities nor Collective Investment Schemes.
Use of Proceeds from the Proposed Investment
The proposed investment of US$1million into Kryptos-X will be dispersed over a period of approximately 3 months from the date of signining off a definitive investment agreement between FFG and Kryptos-X. The proceeds from the proposed investment will be utilised by Kryptos-X in the following manners:
i. 20% (US$200,000) – incidental set up cost to buil up the operation of Kryptos-X.
ii. 40% (US$400,000)- for hiring key employees of Kryptos-X’s operation.
iii. 40% (US$400,000) – for building the software system required to run the operation of Kryptos-X.