LAToken, formerly known as AIBanks Zalogo, is a blockchain platform for tokenizing and trading real assets using cryptocurrencies globally. Put simply, LAToken is a Blockchain Exchange, where you can sell and buy shares, loans, gold, real estate, works of art and other real assets using cryptocurrency.
The platform provides investors with transparent price listings and diversification across multiple asset classes as it allows the creation and listing of third party asset backed tokens compliant with LAToken disclosure and legal structures. This is an important note that brings up a vast array of legal problems which will be explored below. The LAToken platform is already operational allowing to tokenize assets, list them for sale and trade them at the LAT platform. Tokenized Apple and Amazon shares, for instance, are already traded at the LAT platform, and trading of tokens backed by real estate and works of art will be launched soon, the company claims. Apart from trading liquid assets (e.g. Publicly traded companies such as Amazon or Apple) LAToken offers an opportunity for investors of all sizes to own fractions of previously illiquid assets accessible only to large investors (Such as real estate or works of art), thus diversifying their investing portfolios.
How does it work
There are different approaches to different markets. Every market has its own legal obligations and issues. For publicly traded equity, debt and commodities trade such as shares, bonds and commodities, the process is as such:
- LAToken issues liquid asset-backed tokens (LABT) backed by publicly traded asses (e.g. an Amazon share)
- Investors buy LABT at a LAT platform auction, using cryptocurrencies.
- On the predetermined settlement date, LAToken buys back LABT from investors at the current market price of the underlying asset. (e.g. the current market price of an Amazon share at the NASDAQ)
The liquid asset-backed tokens (LABT) are issued on the Ethereum platform by means of the ERC20 smart contract, and as such will be connected to the investor’s Ethereum addresses and will require ‘gas’ for transactions.
The advantages here seem to be the smaller transaction costs and fees as well as the appeal to small investors.
As for illiquid assets trade (e.g. works of art and real estate) the process is as follows:
- Asset owner sells part of the asset to a LAT-certified custodian
- Asset is tokenized and sold to investors at the LAT platform
- Investors may sell the asset-backed tokens on a secondary market
- The seller buys back the asset on the settlement date or the custodian sells it at a fiat auction
Keep in mind: LAT-certified custodians receive documents preserving the right to exercise the sale of the property in case it is not bought out (for the US: Promissory Note, Deed of trust and Memorandum of option from a property owner).
The process for illiquid assets trade is, however, different from case to case. An investor seeking to sell a portion of his house will have to undergo a different process altogether while an investor seeking to sell a portion of his art work will have to undergo another process.
Use of funds
The token sale proceeds will be used for asset owners’ and investors’ engagement to the LAT platform (40%), token module development (10%), proof-of-assets servicing deployment (10%), AI underwriting development (5%), LAT fund for market making and providing liquidity (20%), the team bonus pool (10% capped at $1 mln) and administrative expenses (5%).
Currently, stage I of the token sale raised $9,5 million in 3 days, with all 25mln tokens bought and 5 mln tokens extra taken from the reserve.
LAT do not grant their holder ownership or equity in the company or the right to participate in the control, direction, or decision making of the company. Well, if LAT holders do not get any ownership or equity in the company, how are the investor’s rights enforced?
Taken from the company’s papers, “LAT are issued on the basis of a smart contract via a blockchain platform. A smart contract is a way to discharge obligations by means of the algorithm input into the respective program code. As such, smart contracts shall fully comply with the laws applicable to them, in particular, they shall ensure compliance with confidential information legal requirements.” This sort of phrasing implies LAToken will hold no responsibility over the transactions themselves; they will hold the smart contracts accountable for everything. In short, what they are saying is this: LAToken will provide investors and buyers with a platform to buy and sell real assets one may never see or touch, while accumulating profit at every turn, and the only real assurance said sellers and buyers have that their interested will be taken care of is a vague statement written in LAToken’s documents.
In summary, LAToken presents a unique exchange platform that offers a large variety of options to either sell or buy real life assets with tokens, be it real estate, works of art or publicly traded shares. However, there are too many unanswered questions. The company strictly claims that it is not to be held responsible if anything goes wrong. Furthermore, nowhere does it specify the requirements for being an LAToken-approved custodian. To further drive the point home, every investment on the LAT plaftform will require its own in depth analysis by the company itself and by the LAToken-approved custodians.
Nonetheless, the fact they have a product which is running indicates the company is willing to and have already spent funds to turn LAToken into a successful platform. A big enough volume of exchanges and transactions in the future will pave the way for legal recourses to help smooth the processes behind trading with the LAToken platform.
Advisors (information taken from company website):
- Cecilia Mueller Chen – Legal and Compliance Advisor for LAToken – Former Chief Compliance Officer at China Construction Bank, Senior Regulatory Officer at Deutsche Boerse, COO at UBS.
- Hague van Dillen – Portfolio manager at Farnkling Templeton with $730 billion in assets under management.
- Bradley Rotter – Security Advisor for LAToken – Co-Chair of security platform Rivetz and Executive Chairman at WatershipBlue Inc.
- Anish Mohammad – Security Architect for LAToken – Advisor for Hyperloop, Lead Security Architect at HSBC, Advisor at Ripple Labs.
- David Drake – Real Estate Products Advisor for LAToken – Chairman of LDJ Capital, LDJ Bitcoin investments, LDJ Real Estate Group.
- Ismail Malik – Blockchain R&D and ICO Advisor for LAToken – Executive Chairman of Blockchain.com, CEO of BlockchainLab, Founder of ICO Crowd Magazine.
*Disclosure – At the time of writing, cryptorated staff owned no LAToken tokens.
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Founder and CEO of Home Loan Marketplace (MPLaaS) Zalogo, founder of a back-office for hedge funds, covered financials at hedge funds Avega Capital and Marcuard Spectrum as the Director of Research, Worked in IHS CERA, VTB and Sberbank, Director of Founder Institute in Moscow. Has a Masters in Finance, NES. Studied global banking at Harvard and Stanford.
Implemented React.js for Zalogo, head of development at ZhilKomfort. web developer at Insight Russia, back end developer at Mattino, winner of international web-development contest 1S Rarus, has a B.S., Financial Analytics, from the Financial University.
Co-founder of Compensair, Engagement Manager at McKinsey & Company, Senior Investment Analyst at Rusnano, Investment Analyst for Zindel Investment Partners LP. Has a MSc, Accounting and Finance from The London School of Economics and Political Science, from which he graduated with merit, and MSc, Economics from the Moscow State Institute of International Relations.
COO at Sidorok Capital, Counsel to Chairman of the Board at Agrico, Head of Private Banking and Branding at Narodniy Credit Bank, Barclays Private Banking partner. Has a BA in history from King’s College in London.
|Token Sale Dates||
Stage II: 5 September 2017 – 12 September 2017
Stage III: 19 September 2017 – 26 September 2017
Stage IV: 3 October 2017 – 10 October 2017
Stage I: 25,000,000 + 25,000,000 in reserve (to be issued in case of excess demand). LAToken have pulled 5 million tokens out of the reserve and into the sale. 30,000,000 LATs were sold and $9,5 million have been raised in 3 days.
Stage II, III and IV: 50,000,000 each. (At a higher, not yet determined price)
A total of 400,000,000 million tokens, half of which are for sale or reserved. (The other half, or 200,000,000 tokens are divided as such: network growth – 20%, team pool – 10%, company tokens – 20%).
Stage I: LAT = 0.001 ETH.
Stage II: LAT = 0.0011 ETH.
Stage III: LAT = 0.0013 ETH.
Stage IV: LAT > 0.0013 ETH (Yet to be determined)
|Technical White Paper||
Presents the readers with a lot of technical jargon with charts and statistics which overall dampen what seems to be the main issue: legality and safety.
Presents an interesting concept to make real life assets more accessible to smaller investors. Most of the team and their advisors come from a banking background. The trades and markets involved in their platform are huge in numbers and offer a diversification of assets for buyers and what-would-be an easy way to sell a portion of their own assets. When push comes to shove, however, there are too many trust and legal issues. LAToken doesn’t guarantee token holders and platform users anything, and offers very little answers for happens if and when. Property enforcement also seems to be the opposite of decentralization. But, they do have a product.