Amsterdam-based crypto exchange Blockport is facing uncertainty and has declared bankruptcy after its security token offering (STO) failed to meet minimum expectations, ending up in disaster.
Blockport Files for Bankruptcy After STO Failure
Between April 16 and May 15, Blockport launched a token sale in which the exchange sought to raise $5.62 million, but things didn’t turn out as planned. The company’s Chief of Product and Founder Sebastiaan Lichter announced last month through a blog post that the STO project failed to hit its soft cap of $1.13 million. Shortly after, Blockport filed for bankruptcy, but Lichter indicated that the token sale participants would be reimbursed the money from their investments.
The founder indicated that since the exchange’s first equity fundraising round turned out disastrous, they would not be able to uphold the expected growth path and as a result, there was a need for significant scale down of the crypto exchange’s team and operations. Lichter indicated that Blockport was not in a position to issue new BPT tokens because of the flawed STO. Following the announcement, the exchange’s native BPT token crashed hard, its price plummeting from $0.094 to $0.0063, which is a loss of close to 93% in ten hours.
Blockport ICO in 2018 Raised $15 Million
Last year in January the crypto exchange had an ICO and managed to raise $15 million. However, the STO differed from the ICO as investors were offered not only tokens but also promised profits of the company as well as access to Blockport’s Board and management annual meetings. The STO could not meet expectations, and Blockport announced its failure, promising to refund investors.
STOs are becoming the cryptocurrency industry’s most preferred fundraising method because it addresses some of the regulatory challenges surrounding ICOs. It seemed like the last resort for Blockport to fund the development of its platform, but it remains to be seen whether this strategy will be adopted in the bigger industry in the future.
The exchange has claimed to be scaling down its business for it to continue development, and although Blockport had announced that it would take its platform offline, it is still online.
Featured image: DepositPhotos © minervastock
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