Setback for NextBlock Global could dampen investor enthusiasm for Canadian Blockchain stocks
SmallCapPower | November 7, 2017: NextBlock Global, a Toronto-based venture capital firm investing in Blockchain technologies, announced recently that it is scrapping its planned $100 million public listing on the Toronto Stock Exchange and return money to existing investors. The scrapping follows a Forbes’ article last week (November 1) uncovering misrepresentations in an investor deck of NextBlock Global that falsely listed some crypto and blockchain experts (Kathryn Haun, Vinny Lingham, Dmitry Buterin and Karen Gifford) as members of the firm’s advisory board. In another false inclusion of experts in its advisory list, Bitcoin Magazine recently reported that Dmitry Buterin, co-founder of Blockgeeks and father of Ethereum co-founder Vitalik Buterin, were also included in investor decks without their consent. Speculation has started to swirl as to whether or not this NextBlock Global setback could dampen enthusiasm for Canadian Blockchain stocks.
For example, HIVE Blockchain Technologies Ltd.’s (TSXV:HIVE) stock price has dropped more than 40% from its 52-week high of $6.75 during the past two trading sessions alone after the company revealed that it will release 24,636,705 common shares from lockup, a week earlier than planned, at the open of the market on Wednesday, November 8, 2017, which HIVE said will allow for more market liquidity.
And another popular Blockchain name, Leonovus Inc. (TSXV:LTV) has seen its share price slide 19% from its 52-week high of $0.70 during the past couple of days.
Alex Tapscott, CEO of NextBlock Global said on Sunday publicly and through emails, “Our first responsibility is to our existing investors and we believe this is the right course of action for all stakeholders. We strive to always act in the best interest of our investors and we are in the process of reaching out to each of them to discuss next steps, including the return of their original investment, timing, and participation in any profits. As a young company, we have stumbled in our efforts to take our company public and we will work hard to rebuild the trust of those we have disappointed. Going forward, we remain as confident and excited as ever about the promise of blockchain technology.”
Following the allegations, underwrites and agents to the IPO (Canaccord Genuity and CIBC) withdrew from the proposed offering.
Alex Tapscott, a former investment banker and best-selling author of ‘Blockchain Revolution’, founded NextBlock Global in July 2017, as a new digital asset investment company with the raising of an oversubscribed $20 million private financing. NextBlock Global had planned to raise an additional $100 million through public offering for investment in digital currencies and blockchain infrastructure. With the planned public listing cancelled, it remains to be seen how the Company rebuilds the trust among investors and the next course of action to go public again.
Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own shares in the company mentioned above.
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