Polymath, a startup that wants to usher in a crypto revolution, has raised $58.7 million in a token sale, according to a filing with the Securities and Exchange Commission.
The token sale, which was open to accredited investors, was filed with the regulator as a private placement, a way for companies to raise capital from a select amount of investors, after the company raised the funds.
A portion of the token sale went towards building Polymath’s platform, which aims to allow financial-services companies to make and issue tokenized securities, according to a person familiar with the matter.
Currently, most tokens in the digital coin market are so-called utility tokens which provide holders access to certain services. The point of the Polymath platform is to make it easier for companies to issue digital securities to raise money in a compliant way.
“The technology serves as a launch pad or on-ramp for companies who want to create and issue tokenized securities, with the complex technical and legal functions of a token sale, Know Your Customer program, and development built in,” a statement from the company said.
The fact that Polymath filed with the SEC as a private placement for its token sale is striking considering remarks Tuesday from SEC head Jay Clayton.
During a hearing on Capitol Hill Tuesday, Clayton said initial coin offerings should be filing under private placement rules. Here’s Clayton:
“I’m unhappy about people conducting ICOs when they should be following private placement rules under our existing securities regulations. Distributed ledger technology has so much promise, as do pure cryptocurrencies, but I’m concerned about ICOs.”
The funding mechanism, which is a darling of young tech companies, has helped some raise hundreds of millions of dollars, although not without controversy. Already, the SEC has halted a number of ICOs through its Cyber Unit for issuing securities to investors.