BCAP Token Offering: still reading the memorandum

Okay, here comes Part II. I tried not to reiterate the things I mentioned in Part I.


The memorandum is not available via direct links anymore but it should be accessible for verified users when they log into their accounts.

BC Manager Overview

pages 9–11 generally tell investors how privileged they are when they invest with Blockchain Capital. However, this block of information starts with announcement that BC Manager is “a newly formed affiliate of Blockchain Capital LLC and will act as general partner for BC III DLVF” and that it “will initially be staffed by the same personnel currently managing and operating Blockchain Capital”.


page 12

Our Manager

The fund is managed by its sole general manager, BC manager, which is a Cayman Islands LLC. This legal entity is responsible for operations and manages assets and liabilities.

All of BC III DLVF’s executive officers are employees of BC Manager or one or more of its affiliates

NAV Calculation Methodology

“The NAV per BCAP Token is calculated by dividing NAV by the number of outstanding BCAP Tokens at the calculation date … The number of outstanding BCAP Tokens is calculated as the total number of BCAP Tokens of the same series issued, less total number of BCAP Tokens redeemed and/or purchased under Realization or Liquidity Buybacks as described in the respective section of this offering memorandum.”
“All values assigned to securities, instruments and other assets by BC Manager will be final and conclusive. Neither BCTH nor any BCAP Tokenholder shall have the right to audit the valuations made by BC Manager”

NAV reporting

You will have to believe our quarterly report on Tokenhub.

page 13

Management fee

Base management fee equals 2.5% of BC III DLVF’s NAV , paid quarterly in advance.

Upon each realized investment BC Manager gets 25% of BC III DLVF’s realized capital gains, “on a cumulative basis from inception through the date of each applicable realized investment, computed net of all realized losses and aggregate unrealized losses on write-downs of other investments on a cumulative basis…” I guess that means “we take 25% net for every exit regardless of our general performance”.

Our strategy

Approximate fund allocation: 50% for new investments and 50% reserves. But it doesn't mean anything, see the footnote on the page.

page 15


What this page say is it’s just a summary and it might be incomplete, the full text of Limited Partnership Agreement (as amended, restated and/or otherwise modified from time to time) “will control” in case the summary is wrong or outdated.

Does anyone have access to that mysterious document?


“The expense reimbursements pertaining to the Offering will be transfered by BC III DLVF to either Argon Investment Management LLC … for payment or otherwise directly to the applicable service providers.”

Look at what page 23, Use of proceeds says.


“BC III DLVF will continue in existence indefinitely”. Good luck with redeeming your tokens. However, “DLVF may be dissolved by BC Manager … upon its determination that such dissolution is in the best interest of the Partners”. When that happens, good luck with redeeming your tokens again.



In my opinion, it means the following:

  • BC Manager takes 25% net after each “disposition of investment”
  • The rest will be used “For any purpose permissible under the Limited Partnership Agreement, including without limitation for reinvestment…
  • Whether or not repurchase or redemption take place at all is entirely up to BC Manager.

page 18


“BC Manager may offer the right to participate in investment opportunities of BC III DLVF to other private investors, groups, partnerships, corporations or other entities, including, without limitation, any other funds managed by affiliates of BC Manager whenever BC Manager, in its sole discretion, so determines.”


“Except as otherwise set forth in the Limited Partnership Agreement, the Limited Partnership Agreement may be modified or amended at any time with the written consent of BC Manager”

That’s the way the cookie crumbles. We can change the rules any time.


page 20

You've got to see that. What it basically is about:

  • BCAP Tokenholders are entirely helpless
  • The ubiquitous Limited Partnership Agreementallows BC Manager to determine in its sole discretion any amounts to pay itself or its affiliates or BCTH, Argon Advisors or their affiliates for any services rendered to BC III DLVF

page 21

As well as managing redemption and repurchase of BCAP Tokens by BTCH, BC Manager may purchase BCAP Tokens for itself or its affiliates at its own discretion.

Blockchain Capital has got an engagement letter with Argon Advisors and the funds from BC III DLVF may be invested in an affiliate of Argon Advisors. BCAP Tokenholders will not be privy to such negotiations as BCTH, Argon Advisors, BC III DLVF or BC Manager will not be required to disclose the information about any future agreements or relationships among themselves or their affiliates.


page 22

The technical part of the deal, the entity behind the digital tokens.

page 23

Use of proceeds

“Total offering expenses are anticipated to be greater than $500,000, but not exceeding $1 million”.

Taking out up to 10% of the money in expenses. According to page 5 they “will be billed to BC III DLVF and amortized quarterly over four years”.


page 24

The CEO of Argon Group, Stan Miroshnik is the COO and one of the two directors of this company.

Executive Compensation

“Certain members of our Board of Directors and senior management are party to employment agreements with Argon Advisors. From time to time, Argon advisors or its affiliates may also adopt other cash and equity incentive-based arrangements to compensate our management and other employees…”

The Board of directors is between two and eight persons, appointed by Argon Advisors.

page 25

Distribution Policy

“BCAP Tokens have no distribution or dividend rights other than on a redemption as further set out below. Any return of capital to BCAP Tokenholders will occur through open market purchases of BCAP Tokens as described under the captions “Realization Buybacks”, “Liquidity Buybacks”, “Fixed Price Offer” above”.

page 26

Optional Redemption

After a period of ten years from the issue date some or all of the BCAP Tokens may get redeemed in ETH or other high liquidity cryptocurrency.


No assurances as to liquidity or retention of the initial offering price if the tokens make it to the market.

Investor Allocation

“Subscriptions need not be accepted in the order received, and the BCAP Tokens may be allocated among subscribers who subscribed early in the offering period and for significant sums”


page 29

Income Tax

If you hold on to the BCAP Tokens, you are okay: “there is generally no tax on capital gains in Singapore”. However, if you trade in BCAP Tokens, you are in for a big surprise — you are subject to taxation under Singapore law.

Part III has just hit the fan.

This is all I have time for now. I hope this helps. Make sure you have read and understood the disclaimer at the bottom. If you come across any factual mistakes or faulty grammar you are welcome to point them out in your comments. To get updates or PM me you can always follow me on Twitter.

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