South Korea’s largest internet conglomerate, Kakao, is running an Initial Coin Offering (ICO) to raise capital for its blockchain venture called Clay. Kakao operates applications and has dominance of about 90 percent over their respective markets.
In March, Kakao made its initial attempt to carry out a token sale in Switzerland. The attempt was met with failure as Financial Services Commission (FSC) did not clear the way for Kakao.
On November 19, a business-related mainstream media outlet based in South Korea reported exclusively about Kakao’s plan to raise around $300 million for the development of in-house token.
A local publication was informed that the majority of the funds have been secured already by Ground X, a subsidiary focusing on blockchain work. Also, a Chinese venture capital firm is allegedly involved in the token sale.
“The target amount is $300 million and Kakao is very close to securing its target. A China-based venture capital executive held a meeting with a meeting with Ground X in September and, even at the time, Ground X was planning to raise $300 million.”
Since it is a private sale, only registered, accredited and approved institutional investors have the right to invest in Kakao’s token sale. The company fastidiously carried out the procedure of raising capital to ensure that it does not violate regulations in Japan, South Korea and the United States.
On November 27, the chairman of U.S. Securities and Exchange Commission (SEC), Jay Clayton said:
“We don’t believe Bitcoin is a security. Many of the ICOs that you see and you talk about, they are securities. And if you’re going to offer or sell securities, you have to do so in compliance with our laws. We’ve been clear about that, the recent actions further emphasized that our securities laws apply to the ICO space. And if people are going to raise money using Initial Coin Offerings, they either have to so in private placement or register with the SEC.”
Conducting a private token sale is just as complicated as raising venture capital funding. Which is why most of the companies do not prefer to carry out private token sale. For a company as big as Kakao, it was of paramount importance to be in compliance with both local and international regulations.