Attestation Of Accredited Investors

We keep improving Byteball as an investment platform, and today we are launching a tool that is absolutely required for a large class of investments: verification of accredited investors.

Billions of dollars were raised in ICOs in 2017. Most of these ICOs were selling utility tokens trying satisfy the Howey test and avoid being classified as securities (but still miserably failing the duck test). But not every investment offer can be packaged as a utility token, and this game is becoming increasingly risky, as exemplified by the recent Munchee case.

Most countries restrict access to risky investments and make them available only to accredited (qualified) investors. For example, in the US, one can sell unregistered securities under SEC Rule 506(c) if all investors are accredited.

So, to go beyond utility tokens and be able to sell securities (security tokens), one has to take reasonable steps to verify that every investor is accredited. Now, it is easy to do on Byteball platform.

We integrated with VerifyInvestor.com which provides exactly this service. They have already worked with a number of ICOs as an outsourced verifier of accredited investor status.

We built a chatbot (which is already in the Bot Sore) that allows investors to get their accredited status verified and saved in the Byteball DAG as an attestation.

The price of attestation is $79.00, and this amount is returned to the user as an attestation reward in case he successfully proves his accredited status. The reward is funded from the undistributed pool. There is also a $20.00 referral reward which works similar to the reward paid for real name attestation.

After taking the payment, the bot redirects you to verifyinvestor.com where the actual verification takes place.

You need to choose the way you prove your accredited status:

and upload the supporting documents. Then, licensed attorneys of VerifyInvestor.com will review your documents. They might get back to you if any additional information is required.

The verification takes from a few hours to a few days, and when it is finished, the bot notifies you about the result. If the verification was successful, the bot posts an attestation record to the DAG that confirms your accredited status. All that is posted publicly is just the fact that your BB address belongs to an accredited investor, no personal information is posted. Your personal information is available only to VerifyInvestor.com, it can’t be accessed by the bot nor the issuer(s) of the tokens you are going to invest in.

The attestor address is BVVJ2K7ENPZZ3VYZFWQWK7ISPCATFIW3, which is also a witness.

After you are attested, you don’t need to prove anything to buy security tokens. You already tell the issuer your BB address where you want to receive the tokens, they can just look it up in the DAG and find a recent attestation record.

If you are an issuer, you can enable accredited investor check with just one setting in the ICO bot. What’s more, you can make your token available to accredited investors only even on the secondary market. This is done by requiring in the asset definition that the user must be attested by BVVJ2K7ENPZZ3VYZFWQWK7ISPCATFIW3:

var asset = {
....
spender_attested: true,
attestors: ["
BVVJ2K7ENPZZ3VYZFWQWK7ISPCATFIW3"]
};

See developer docs about issuing assets.

With attestation of accredited investors, Byteball becomes the only ICO platform on the market that allows to offer security tokens out of the box, just by flipping a switch. It also allows to enable KYC checks in the same way. Both tasks are a (small) part of what investment bankers do in the traditional investment world. If the ICOs are to evolve in this direction, the first steps are already done.