Macau gaming company Dragon Corp. is planning to raise 0 million through an initial coin offering of a new cryptocurrency that would issue tokens to be used by VIP junket operators by offering credit on behalf of casino operators.
The move comes as China has ordered a ban on new cryptocurrencies and ordered its cryptocurrency exchanges to shut down. But Dragon’s ICO will not be subject to Chania’s crackdown because it is being issued in Hong Kong, Chakrit Ahmad, CEO of Wi Holding the Thai-based company behind the blockchain technology told CNBC.
“This is the first time anybody has allowed the public to invest in a public junket or become a shareholder of a casino,” Ahmad told the network. “You’re basically becoming a shareholder in a junket, utilizing blockchain technology, getting revenues from that, and plugging that back into the token.”
Digital tokens issued in ICOS are characterized as “a virtual commodity” under Hong Kong’s Securities and Futures Commission and aren’t subject to regulation. But tokens that offer buyers an equity stake are regarded as “shares” and subject to securities rules, according to CNBC’s report.
Controversy has also erupted in the offering, however, as the South China Morning Post reported that among those backing the coin offering is Wan Kuok-koi, a 61-year-old who served 14 years in jail for “an array of gangland crimes.”
The alleged connection could attract regulatory interest in the deal, the report speculated.
As for the offering, Ahmad told CNBC that the money raised from the sale of digital tokens would partly fund construction of the proposed Pearl Casino Hotel, a 16,000-square-meter, floating structure, scheduled to be brought from Norway—where it is currently being built—to Macau by 2019.
The group also plans to develop a “social wallet” that holds the digital currency to allow players to withdraw fiat currency from an ATM, Ahmad said.
“We basically provide liquidity via our own exchange, and also major exchanges in the world for the digital currency, so that token will be listed in multiple exchanges,” he told the network. “You can have a digital exchange in Hong Kong or in Thailand or elsewhere, and you can cash out.”
The digital tokens are scheduled to be issued October 27. Ahmad said the group has already secured $265 million for construction.
