66 times the income! Block.one is not afraid of huge amounts of money to buy back shares, is the SEC going to shoot?

According to a press release, Galaxy Digital Holding, a cryptocurrency fund founded by billionaire Michael Novogratz, is selling its stake in Block.one, making it no longer the actual "Block.one" investor". Galaxy Digital accepted the offer to acquire its common stock on May 20. Block.one is the development company behind EOS.

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Image source: pixabay

Galaxy Digital received $71.2 million in the deal, giving up its "substantial investor" status at Block.one. This designation usually means that Galaxy holds a total of more than $100 million in Block.one shares. However, Galaxy said that determining whether a company is a “substantial investor” requires consideration of multiple factors.

Galaxy announced the sale of shares, saying its investment in Block.one received a return of 123%.

Michael Novogratz, CEO and founder of Galaxy Digital, said. Block.one's shares outperformed investments in other sectors, and Block.one repurchased its shares in order to rebalance its investor portfolio and diversify it appropriately. Selling these shares does not mean that the relationship between Galaxy and Block.one is over.

“We will continue to work closely with Block.on. Block.one is a key partner for many of our business lines, including the Galaxy EOS VC Fund, which is based on the EOS.IO agreement. Company and remain interested in EOS.IO.

In 2018, Galaxy and Block.one formed a joint venture that invested $335 million in the EOS ecosystem.

According to Bloomberg News, Galaxy's exit is part of Block.one's broader share repurchase campaign, in which early investors in Block.one will receive a return of up to 6567%. This means a return on investment of 66 times.

Block.one will repurchase 10% of the shares this time, and the company's valuation is about $2.3 billion, which is higher than the valuation of about $40 million in the 2017 seed round. The repurchase price is about $1,500 per share, and the price paid by investors in this financing is $22.50 per share.

Block.one CEO BB responded to the stock repurchase in the Telegram group. He said that

Last year's repurchase was to make room for new investors, and it would not cause unnecessary expansion of the company's balance sheet. This round attracted high-strategic shareholders including Peter Thiel, Alan Howard and Louis Bacon, which had a positive impact on the company's development. The same is true for this year's repo, and we look forward to achieving new milestones. We handed this information and a lot of other information to Bloomberg author Alastair Marsh, but the facts were selectively reported in a bad way. I also told Alastair that I was not involved in the repurchase. I am more optimistic about our future than ever before. In any case, we will ignore unnecessary distractions and continue to focus on our progress.

For the sale of Galaxy's shares, BB said it will continue to work closely with Novogratz as a shareholder between the companies.

Block.one CTO, EOS founder BM also said that one thing that must be clarified is that Block.one has sufficient funds and is not recovering funds.

However, some people questioned the reason for Block.one's stock repurchase. Tokensoft CEO Mason Borda commented:

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Block.one repurchased for three reasons: 1. They undermined compliance, and their lawyers suggested doing so; 2. The US SEC set out to investigate the matter and they took remedial action before receiving the final order; 3. SEC requirements It does this.