On October 29, 2020, Curzio Research listed its Security Token Offering tokens, known as CEO tokens, on the Seychelles-based MERJ Exchange. By listing on MERJ, the CEO tokens became the first tokenized private securities in the world to trade live on a public exchange that retail U.S. investors can also participate in. The CEO tokens represent $4,000,000 USD worth of shares in the company from a financing round in 2019. Upon doing so, the company became the first in the world to be a private United States-based company to list tokenized securities on a foreign public exchange that is open to U.S. citizens and investors from any other recognized jurisdiction around the world. Live prices for CEO tokens will be available on stomarket.com.
Curzio Research is an emerging leader in the financial newsletter industry and its current model has helped generate more than $6 million in revenue in the first 24 months of operation. “Being first to do anything is exciting and challenging. Tokenizing our company was no exception,” stated Veronica Charette, publisher and partner, Curzio Research. “First and foremost, we wanted to be sure we did everything by the book, but the book for security token offerings (STOs) is still being written… so we were constantly learning and adapting. We could not have managed this listing without the dedicated and passionate team of visionaries we’ve worked with.”
In 2019, the Company partnered with Securitize, a token issuance and lifecycle management platform, to complete its digital security issuance and private placement offering to U.S. accredited investors and non-U.S. investors with exemptions under Regulation D and Regulation S of the Securities Exchange Act. The Company raised their financing round almost entirely from its own client base. Upon the passing of the 12-month lock-up period for CEO token holders and upon the receipt of an opinion letter, Securitize (as the acting Transfer Agent to Curzio) removed the restrictions on the stock legend of the CEO Tokens under Rule 144 of the Securities Exchange Act to allow for trading globally to public investors on MERJ Exchange.
In order for the tokenized securities to trade on a secondary market to non-accredited retail investors in the United States, the company needed to use the Rule 144 exemption to become accessible to non-accredited U.S. investors. Part of this involved having the restrictive legend removed from the security. In order for private securities to trade on a secondary market that provides order matching and clearing and settlement services, the secondary market must be registered with its country’s securities regulator. In the United States, only a handful of registered secondary markets are in operation that support security tokens. These secondary markets consist of broker-dealers such as Alternative Trading Systems (ATS) in the United States or Multilateral Trading Facilities (MTF) in the U.K. and Europe. Alternatively, a security can also be listed on a public exchange like NASDAQ or London Stock Exchange, but the infrastructure and approvals are not yet in place for these markets to support security tokens. Nevertheless, the cost of listing on a major market would also be prohibitive for smaller issuers like Curzio Research.
MERJ Exchange started life in 2011 as part of an IMF backed program to establish a national securities market in the Seychelles. Since then MERJ has developed into one of the most dynamic exchange operators globally, with a market growing faster than any other member or affiliate of the World Federation of Exchanges. A focus on the select use of technology to streamline processes and reduce costs has helped attract $1.7bn of market listings, attracting issuers and investors from all over the world.
The CEO token has transitioned to a listed security, and consequently widened access to a far broader global audience of institutional and individual investors. The company was able to do it for considerably less in cost compared to having pursued an IPO or public listing in the United States. All of this would not have been possible without the use of blockchain to allow security tokens to enable the company to first raise $4,000,000 digitally from investors all around the world and to now list on a foreign exchange.