For the past week Islamic Coin, created by the Haqq Association, has been selling its coins through its Reg D token offering with OpenDeal Broker, The Capital R, a subsidiary of Republic, but many red flags raise concerns and makes one think twice before investing.
As per the proponents of ISLM (Islamic Coin token), it is a digital money that adheres to Shariah principles and emphasizes ethical values.
The creators of IslamicCoin have always pointed out that the HAQQ and Islamic Coin are supported by leaders from the royal families of Abu Dhabi and Dubai, backed by experts in Islamic and traditional finance from Wall Street and the City of London. However having advisors that are royal families doesn’t necessarily mean it is supported by them or that they have any legal responsibility in the company. Does it? None of these Royal family members are on the executive board or in the operations of the company.
In various press releases, the Haqq management has stated, that Islamic Coin as the native currency of HAQQ, a community-run network from Swiss-based non-profit Haqq Association is compliant with Shariah law. They claim that Islamic Coin has a finite total supply and 10% of each issuance will be deposited in the Evergreen DAO non-profit virtual foundation for investment into Islam-related ventures or charities.
No Base of operations
However Islamic Coin has actually no base of operations as per its website. There is no registration of Islamic Coin or Haqq Network neither in Switzerland or UAE. As per Republic’s website, the token sale is being offered by Bored Gen based out of Dubai’s DMCC. It is not an offering for a share, membership or partnership interest in Bored Gen DMCC or any of its affiliates.
Searching the DMCC business directory, BORED GEN DMCC is registered with having an office in Unit No: 705 The Palladium Plot No: JLT-PH1-C3A Jumeirah Lakes Towers, Dubai, UAE, however the contact email is for someone who works in ArbiLegal.com which is actually an international team of lawyers specializing on FinTech and other projects which involve bleeding edge technologies such as AI and blockchain. There is no mentioning of the activity that BORED GEN DMCC carries out.
In addition Republic website clearly states, that this is an offering for the right to certain defined digital assets offered by Bored Gen DMCC. It is not an offering for a share, membership or partnership interest in Bored Gen DMCC or any of its affiliates.
But let us see, if a company is offering a token sale and is based out of DMCC Dubai, it has to be regulated by Dubai’s virtual asset regulatory Authority. Remember OPNX token exchange platform, VARA fined it for marketing its operations in the UAE when it didn’t have a license. Also noteworthy is Republic has clearly stated this sale is only for non USA investors and if investors from the USA want to invest they have to be accredited investors.
Why Raise Funds?
With four days left to invest, Islamic Coin has raised $722,812 from 907 investors with a minimum investment of $50 and a maximum of $1 million! They have set the price of their token at 0.3 cents and aim to raise $43 million. But the question is why IslamicCoin which was created by Haqq would want to raise money at minimum token value of 0.3 cents given they have $193 million in their coffers already raised through private rounds.
Haqq in its press release states that it had raised $193 million from ABO Capital, DF 101, a195 and Optic Capital.
Haqq first stated back in August 2022, that it had raised $200 million in a private sale where none of the HNWI investors were mentioned. Then in July of this year they announced they had raised another $200 million from ABO Capital, a subsidiary of multifamily Blue Ocean Group.
So in total they should have raised $400 million. What happened to the recent $200 million? What happened to the previous $200 million? Why is the total now only $193 million.
Looking closer at the announcement with ABO capital, it states, “The latest partnership will entail introducing Islamic Coin to the ABO network of investors and helping the team structure innovative Shariah-compliant financial products that could be used in the digital asset space to raise alternative funding. The deal provides access to a maximum of $200 million as and when required and ensures Islamic Coin has a long and stable runway.”
So they never really raised $400 million, they raised $193 million. But even so, if a startup had $193 million to work with, why would they be having a token public sale where the price is 0.3/token.
Republic’s vested interest
But why listen to me, just read what Republic itself has to say about the Islamic Coin public sale, “Deals involving crypto and/or digital assets such as NFTs are extremely speculative and present additional risks. Investor sophistication and enhanced independent reviews are highly recommended. ISLM Tokens may trade at lower prices on public token exchanges than the prices that the ISLM Tokens are purchased in this Offering. Shortly after this Offering, the Company may seek listing of the ISLM Tokens on public exchanges. The ISLM Tokens may trade at lower prices on those public exchanges than the prices Contributors acquired them in this Offering, and Contributors would be unable to sell their ISLM Tokens during the lockup and vesting periods.”
It doesn’t stop there, “This Issuer operates from a foreign jurisdiction; and therefore, many of your country’s common laws may not apply or be enforceable. This is a new company and has not generated revenue, nor has it had any significant operating history.”
And finally, “Affiliates of OpenDeal Broker LLC have financial interests in this offering, or in the offering’s sponsors, and may have invested at more favorable terms including the price and lock-up terms.”
So OpenDeal Broker are clearly saying they have vested interest in selling IslamicCoin.
OpenDeal Broker had openly stated prior to the IslamicCoin public sale that OpenDeal Broker LLC is compensated in cash commission and tokens from BoredGen DMCC (“Islamic Coin”, “BoredGen”). BoredGen DMCC will pay OpenDeal Broker LLC, a registered broker-dealer: 6 percent (6.0%) of the gross proceeds of tokens sold up to but not in excess of $2 million, and 5 percent (5%) of the gross proceeds for any amount raised in excess of $2 million at the time of closing, with a minimum fee to ODB of $25,000 in aggregate. BoredGen DMCC will also pay ODB two (2%) of the dollar value of tokens sold in this Offering, plus certain offering costs.
Even Grinding Poet, had this to say about IslamicCoin on X (formerly Twitter), “This is so funny! Public sale at a valuation of $30b (yes) raising $43m! Every single person that invests in this will lose money.” This garnered a response from Islamic Coin stating that $30 billion valuation is wrong.
So maybe one should think twice or maybe even 43 million times before investing in Islamic Coin’s token sale.
