Home News So You Want to Launch STO…? -Knowbella Tech, Excerpts ①

So You Want to Launch STO…? -Knowbella Tech, Excerpts ①

by default1

Knowbella Tech Founder Jason E Barkeloo wrote details on STO, according to his media site.  
Knowbella Tech is a blockchain-based platform project for scientists, and its token is named as Helix.


What is STO?
A Security Token Offering (STO) based upon blockchain technology can be thought of as a next-generation Initial Coin Offering (ICO). We prefer to think of it as a regulated ICO.
In December 2017, the U.S. Securities and Exchange Commission’s (SEC), Jay Clayton, Commissioner, said, “I believe every ICO I’ve seen is a security.”[1] The SEC has become more proactive about regulating ICOs. [2]
Unfortunately, outright fraud has started to plague ICOs. Where ever there is easy money, the crooks will follow.[3]
This was backed-up by Operation CryptoSweep, with nearly a hundred ICOs targeted for investigation.[4][5]
Frankly, if I had launched an ICO, I would be concerned about who my prison cell mate might be.[6]
Why STO?
The value proposition of https://Knowbella.Tech is crowdsourcing underserved scientists around idle intellectual properties (IP). As the researchers openly collaborate they are rewarded with Helix tokens. Over 50% of the tokens in the issuance are reserved for researchers.
For those scientists who opt-in, we will matchmake them with employers. This is good for the researchers who opt-in because Knowbella Tech facilitates opportunities. The employers benefit by being able to see the researchers in action in real-time. Unlike job hunting platforms in which you only update your profile when you are looking for a job, Knowbella Tech gives employers a window into the real-time collaboration of opted-in scientists and their profiles are dynamic. This will be managed on the blockchain.
As an experienced team with a number of startups and exits over the past 30 years, we suspected unregulated ICOs would come to a nasty screeching halt. Because of that, we decided to consider our Helix token as a security from the start and make it SEC-compliant. Of course we knew this would be time consuming and expensive. Most startups cannot muster the funds and expertise to launch a regulated STO.
Luckily, due to our previous successes, we were able to bring together funds and a team to give a run at launching a STO. We decided to pursue a Regulation A+, Tier 2, Form 1-A filing with the SEC. This is not a cheap proposition. Fortunately, once again, we secured an expert Midwestern law firm charging Midwestern hourly rates. This was less than the rates quoted by law firms on either coast.
As an experienced team we knew sophisticated investors would require Knowbella Tech to actually be a sustainable revenue-generating company focused on providing a multi-bottom-line return on investment (ROI). We also think cryptocurrency investors burned by fraudulent ICOs and those ICOs that simply exploit their user base, would similarly demand a revenue-generating sustainable business. We know our business had to stand on its own without the bluster of buzzwords such as “blockchain”. Yes, we are using blockchain technology, but it is only an enabling technology that supports the business.
It is with this philosophical approach that we decided to give investors and researchers value equivalent to equity. We believe those researchers participating in building the Company, its platform, and its value should not be exploited; rather they should enjoy any ROI realized by their participation.
Tokens as Securities
To this, and inline with our focus on making Helix a bona fide security, we tied Class H shares in the Company to the Helix tokens. As the scientists increase the value of the Company, the value of the H shares increases, and this in turn increases the value of the attached Helix they have earned. This should spill over to the non-scientist holders of Helix on SEC-compliant exchanges.
If the Company achieves an ROI liquidity event such as an Initial Public Offering (IPO), or is purchased, the Helix holders can gain Class H shares for the Helix they hold and enjoy the liquidity of the H shares on a stock exchange. Now the Helix holder has both tokens and stock. The Helix is much sooner liquid than the shares, but the shares require regulatory reporting, keeping both the Helix holders and equity holders up-to-date on the Company’s inner workings.

  1. Barkeloo is not a lawyer. He does not pretend to be a lawyer. Nothing in this posting is legal advice.
  2. Barkeloo is not an accountant. He does not pretend to be an accountant. Nothing in this posting is financial advice.
  3. Lastly, Barkeloo is not a bot!


[1] Stan Higgins, SEC Chief Clayton: ‘Every ICO I’ve Seen Is a Security’, https://www.coindesk.com/sec-chief-clayton-every-ico-ive-seen-security/, 06 Feb 2018.
[2] Jay Clayton, Statement on Cryptocurrencies and Initial Coin Offerings, https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11, 11 Dec 2017.
[3] Gareth Jenkinson, Unpacking the 5 Biggest Cryptocurrency Scams, https://cointelegraph.com/news/unpacking-the-5-biggest-cryptocurrency-scams, 18 Apr 2018.
[4] North American Securities Administrators Association (NASSA), State and Provincial Securities Regulators Conduct Coordinated International Crypto Crackdown, http://www.nasaa.org/45121/state-and-provincial-securities-regulators-conduct-coordinated-international-crypto-crackdown-2/, 21 May 2018.
[5] Jay Clayton, Statement on NASAA’s Announcement of Enforcement Sweep Targeting Fraudulent ICOs and Crypto-asset Investment Products, https://www.sec.gov/news/public-statement/statement-nasaas-announcement-enforcement-sweep-targeting-fraudulent-icos-and, 22 May 2018.
[6] Dan Mangan, ‘Pharma bro’ fraudster Martin Shkreli: I want to serve prison in a minimum-security federal camp, https://www.cnbc.com/2018/03/14/martin-shkreli-asks-to-serve-fraud-sentence-in-minimum-security-camp.html, 14 Mar 2018.