After Forbes uncovered misrepresentations in an investor deck by Canadian crypto venture capital firm NextBlock Global, the company has decided not to go forward with its public listing on the Toronto Stock Exchange and return money to existing investors.
The announcement was made publicly as well as in an email to “friends and investors” from CEO Alex Tapscott. The company was attempting a $100 million CAD ($78 million USD) raise after having already received $20 million CAD in a private offering.
“Today we announced that NextBlock Global will not be proceeding with a go-public transaction,” he wrote. “After careful consideration, we have concluded that the best course of action is to return to existing investors their capital in full and also to have them participate 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.”
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He stated the company will release details on its plan in the coming days. (Tapscott did not return requests for comment.)
The move comes days after Forbes disclosed that the company had falsely named four crypto stars as advisors in an investor deck labeled version 5. When confronted by two of them, Tapscott had told one, Kathryn Haun, a board member of Coinbase, that she had only been included in a printed version, when she had obtained an electronic copy (version 5).
The other, Vinny Lingham, CEO of blockchain identity startup Civic and a shark on South Africa’s Shark Tank, told Alex via email he was hearing he had been named an advisor and Tapscott wrote back, “You are (obviously) not an advisor and have not been listed as one! So bizarre.” Lingham responded he was looking at the deck with his face and bio on it and said, “please don’t lie to me.”
When questioned by Forbes, Tapscott said that another falsely identified advisor, Karen Gifford, a special advisor for global regulatory affairs at Ripple who was previously counsel and officer at the Federal Reserve Bank of New York, had been included after a conversation though he had not been able to confirm her. However, Gifford told Forbes through a representative that no such conversation took place.
The reversal on the public listing is a stunning turnaround for a company that seemed poised to capitalize on the feverish crypto craze that has generated approximately $3 billion in capital for decentralized projects in so-called initial coin offerings. NextBlock had planned to invest in such tokens enabled by blockchain technologies.
It is also a mark on the reputation of Tapscott, who is known for coauthoring, with his father Don, a book on the subject called “Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World.” His resume also includes founding member of the IMF Fintech Advisory Board and World Economic Forum Blockchain Global Future Councils.
With NextBlock, he was aiming to take the speculative excitement around crypto tokens and package it in a security that could be traded on the traditional stock market. NextBlock initially planned to raise $50 million CAD but increased the target to $100 million last Tuesday.
That evening, Tapscott, when asked by Forbes about the four falsely named advisors, said, “I currently have an order book for this financing of $250 million. To me that’s really the big story.”
However, after the Forbes article came out, one of the investment banks underwriting the transaction, Canadian Imperial Bank of Commerce (CIBC) Capital Markets, pulled out of the deal. The same day, the other underwriter, Canaccord Genuity, sent out a revised deck to potential investors with the page listing advisors, including legitimate ones, excluded. “Please note that we have removed the page related to the Select Advisors (formerly page 21),” the email said. “Given that there is no contractual relationship with these advisors, an investment decision should not be based on their involvement.” Canaccord declined to comment on the decision not to proceed with the public listing.
But after the misrepresentations were revealed, Forbes found that the Tapscotts had used more big names in blockchain to tout a previous initiative without their permission. It was also uncovered that both version 5 and the final draft of the investor deck featured a photo of a randomly selected person next to one advisor who had requested his photo not be used.
After publication of this article, Joseph Weinberg, an advisor to NextBlock Global and CEO of Paycase, issued this statement on behalf of all the remaining advisors, who requested not to be named: “Given the circumstances, the advisors concluded that this was the best course of action and we are pleased that the company reached the same conclusion. We support their decision.”
Update, Sunday, November 5, 2017, 10:42pm EST: This article has been updated to include a statement released by NextBlock’s advisors.
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