Arbitrade’s Press Conference and the $DIG Gold Deal with Scotia International of Nevada, Inc.
This morning, Arbitrade held their first press conference from their new headquaters in Bermuda. Apart from covering domestic issues, they announced the gold bullion deal that $DIG token holders have been waiting for. Xavi and I (@Stillman_Crypto) did some research as we weren’t given that many leads during the phone conference. Starting out, we want to name the topics that did not get covered and that will need further clarification in the future:
- News about exchanges (they announced double digit numbers of exchanges earlier)
- News about fixing the $DIG smart contract and the CCEX token swap
- News about the airdrop (that is postponed until the smart contract fix)
The price action leading up to, during and following the press conference has been violent in both directions. Stabilizing in the lower 2000 sat range, $DIG did not perform as well as some were expecting. One reason might be the lack of information on the above topics; another one has to be that we did not get much detail on the bullion contract and the company behind it:
The heart of Arbitrade’s announcements was the fact that they have a signed deal over $10 billion worth of gold (curiously way more than they would need to cover the $DIG token float at an initial peg of $1, possibly to leverage a good price on gold leading up to the introduction of their other precious metal tokens but that leads to further questions as these tokens are not supposed to be backed by gold in the end). Unfortunately, this section was not as well presented and in depth as most of the investors following Arbitrade would have liked. A lack of video stream and the fact that they called the company “SION” - which to most of us sounded like “ZION” - made it seem as if this company does not have a web presence and might not turn out to be a respectable partner, even though they had a representative there. We learned, however, that they were the first international company with a license to be a Gold Broker on the Dubai Gold exchange. As it turns out, the name of the company is “S.I.O.N” — Scotia International of Nevada, Inc., and more specifically their Dubai subsidiary S.I.O.N. Trading FZE. The fact that, apparently, there is a signed contract over $10 billion worth of bullion is the major news that, at least we, have been waiting for. Everything else can be established later. The smart contracts being faulty is an issue that needs to be resolved. But in the end, this is a crypto mining and most importantly a tokenized gold security endeavor. The tokens don’t need to provide much utility or fill a fancy role on a platform, they just need to be a storage of value that can be transferred. The backing in gold, together with the start of the crypto mining operations that has already been reported, is where the $DIG tokens become valuable.
We took a look at S.I.O.N. and they turned out to be a major player in supplying gold mining ventures all over the world. As most of Arbitrade’s audience from the world of crypto are highly sceptical investors but also not necessarily know all the in and outs of the gold market, it makes sence to investigate a bit and see what we can up with. Our preliminary research yielded impressive results:
- They have been a contractor for Virginia based Comstock Mining Inc., supporting them in their gold and silver mining operations starting 2012: “‘We have already amassed over 1,750 ounces of recoverable gold and over 15,000 ounces of recoverable silver on the leach pads and look forward to announcing our first pout and revenue in the coming weeks,’ said Corrado De Gasperis, president and CEO of Comstock.“¹
- Furthermore, in 2018, they provided one of their mobile processing plants to Gold Resource Corporation (NYSE American: GORO) for their open pit exploitation of a reserve called he Isabella Pearl in Mineral County, Nevada holding 192,600 gold ounces.²
- S.I.O.N’s former Vice President of Metallurgy, Michael Drozd, moved on to serve as Vice President of Prophecy Development Corp. after being with S.I.O.N. for seven years. Drozd used to work at Barrick Gold Corp. who recently sent him as Project Manager of Project Expansion at its Pueblo Viejo gold project “where he led a team and developed a prefeasibility study with an overall project budget of US$900,000,000.”³ Barrick were the world’s largest producer of gold bullion in the world in 2017.⁴
Connections like this might not seem that significant to the deal at hand with Arbitrade but it underlines that the people at Scotia International of Nevada are well connected and veterans in the gold space. This is also proven by their partnerships: SION’s branch in Honduras is partnered with Wisbone Gold PLC⁵. Wisbone is an “AIM listed company operating in the precious metals market headquartered in Dubai, UAE. It has wholly owned subsidiaries operating in Dubai, Honduras and Australia.“ This establishes that SION is at the level of national government deals, which further increases the legitimacy of Arbitrade’s/Cryptobontix’ gold deal with the company: “Wishbone Gold plc, the trading and exploration company focused on precious metals (gold and silver), today announces it has signed a joint venture agreement through its subsidiary, Wishbone Gold Honduras Ltd (“Wishbone”), with SION Honduras SA (“SION”), to fund the development and exploitation of existing gold mine sites in Honduras. SION is an associated company of Scotia International of Nevada Inc, a privately-owned mining equipment supply company based in the United States of America. SION has an agreement with the Honduran government to modernize and expand the Honduran mining industry.“⁶
According to the press conference, the bullion from the contracts that are already signed will be held at the world’s largest cash management company that serves clients in more than 100 countries, Brinks Corporate.⁷ This is significant as having a company as trustworthy as Brinks involved is laying a foundation for future audits.
Other than that, the conference call was mostly about domestic issues in Bermuda. Charity work and creating up to 400 jobs in Bermuda⁸ were the main talking points in this section that was focussing on answering concerns brought forward earlier by Michael Dunkley who is the Shadow Minister of National Security and the MP for Smith’s North in Bermuda.⁹ In terms of the sometimes rather short-sighted time frames that crypto investors think in, these developments might not be overly interesting. But in terms of building a long term business and strengthening Arbitrade’s stance in Bermuda, these steps are more than welcome and show that the company is taking a sustainable and sensible approach to establishing their business in one of the top off-shore locations in the world.
Arbitrade’s CEO, Len Schutzman, introduced himself and referenced his impressive background managing multi-billion dollar companies. Being “not a start up guy”, he stated that he is here with Arbitrade to build the next one (You can read more about Schutzman in our first introductory write-up about $DIG and Cryptobontix). Schutzman placed their board among the ranks of the fortune 50. This tweet from $DIG and Arbitrade expert Chris (@cryptogeordie) gives a good impression of the caliber we are talking about here:
Although it was not the main focus of the press conference, we also got an update on the development of the Arbitrade platform that is in beta testing right now. The ICO was not formerly announced as the last steps of regulatory compliance in Bermuda are still pending but the system will be reveiled early September: “ We are building an infrastructure that allows for payment merchant services. It allows for trading of cryptocurrencies. It allows for interest payments on cryptocurrencies held within our platform. I guess you could call it the all in one merchant banking platform.”¹⁰ The $DIG tokens don’t need the Arbitrade platform to be valuable as they will be backed by gold and produce compounding interested through the token buy back and burn that is fueled by the crypto mining operations. $DIG and the other precious metal tokens will undoubtedly gain another layer of value when they are integrated into a grand ecosystem like the one Arbitrade is building.
***DISCLAIMER***
This is not financial advice, please do not invest more than you can afford to lose.
If you have further questions or want to discuss anything presented in this article, you can find us on twitter @Stillman_Crypto and @JimProfitCrypto.
Endnotes
³ https://www.prophecydev.com/company/management/
⁴ http://www.mining.com/worlds-top-10-largest-gold-mining-companies-2017/ ; furthermore: https://www.bloomberg.com/news/articles/2018-02-21/newmont-moves-into-dead-heat-with-barrick-on-2017-production
⁶ https://markets.ft.com/data/announce/detail?dockey=1323-13178711-0VMRLQE6BG8BSP5SD3IBQ1OVGB
⁷ https://www.brinks.com/en/precious-metals
⁹ The minister’s initial concerns that seems to have been very well addressed by Arbitrade: http://mobile.royalgazette.com/opinion/article/20180614/alarm-bells-should-sound-during-thisplatinum-period-of-cryptocurrency&template=mobileart
