DigitalX reports on progress of trading desk deal with Blockchain Group

Maria Nikolova

The agreement, announced earlier this month, will see DigitalX receive half of all revenues generated from customers introduced to Blockchain Global and ACX.io.

There is some news concerning Australia’s bitcoin industry this morning, as Digitalx Ltd (ASX:DCC) has reported on the progress of its trading desk deal with Blockchain Global Limited, formerly known as Bitcoin Group Limited.

DigitalX’s financial report for the half year to December 31, 2016, says that during the period, DigitalX was principally involved in the development of software applications for global payments and financial technology products operating as AirPocket, as well as in bitcoin trading, the operation of a bitcoin sales desk and an application programming interface (API) which operates a dynamic platform as DigitalX Direct (together the Liquidity Desk Operations).

The trading desk generated revenues of US$8 million during the six-month period and a net loss of US$0.3 million. DigitalX wound down its trading operations towards the end of the period, in connection with a shift of the focus of operations to its Blockchain based mobile application, AirPocket, and it sought a buyer for its trading desk.

Subsequent to the end of the half year, DigitalX announced to the ASX on February 7, 2017, that it will benefit from an opportunity monetize the DigitalX Direct platform in working with Blockchain Global Limited. The agreement will see DigitalX receive half of all revenues generated from customers introduced to Blockchain Global and their exchange service ACX.io.

In the latest report, DigitalX says the process of customer introductions has commenced and some former clients have already started using the platform.

The news is interesting not that much because of the transaction itself but rather because it sheds light on the continued efforts of Blockchain Group to expand its business. Blockchain Group was formerly known as Bitcoin Group Limited – a company that became famous for its attempts to float its shares on ASX.

After filing several prospectuses, having amended each one in tune with regulatory requirements, Bitcoin Group (which was supposed to list as “BCG”) abandoned its plans for an IPO and ASX listings in March 2016. The decision was made after on March 4, 2016, ASX sent a letter to the company, referring to a report by Grant Thornton Australia over whether Bitcoin Group had sufficient working capital to carry out its stated objectives. BCG explained back then that the Australian Securities & Investments Commission (ASIC) did not allow forecasts on the Bitcoin price to be used in an assessment of corporate working capital. This was the reason for the results of the report having been rejected and the listing plans – shelved.

This was not the first time that Australian regulators put an end to Bitcoin Group’s public listing plans. In February 2015, ASIC placed a stop order prohibiting Bitcoin Group Limited from publishing any statements with relation to its intention to make an initial public offering of its shares until the lodgement of a prospectus.

ASIC’s concerns stemmed from publications by the company via a social media application ‘Wechat’ seeking expressions of interest from potential investors to subscribe for shares if there is a proposed listing on the ASX. The publications were made before Bitcoin Group Limited was registered as an Australian company by ASIC and before the lodgement of a formal disclosure document (such as a prospectus).

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