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TOPIC: Bitcoin Shop reverse merger

Bitcoin Shop reverse merger 4 years 9 months ago #1725

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Bitcoin Shop Inc., (TUCND +38.07%) an online retailer, became the first U.S. publicly traded company with the word "bitcoin" in its name, a hallmark for a virtual currency whose rapid growth has spawned intense regulatory scrutiny.

Bitcoin Shop, which sells everything from soap to cellphones and takes bitcoin for payment, executed what is known as a reverse merger, according to filings with the Securities and Exchange Commission on Wednesday.

According to filings, the company that runs merged with TouchIT Technologies Inc., based in Nevada. TouchIT then changed its name to Bitcoin Shop Inc. Old news releases from TouchIT described it as a touch-based visual-communication-products company.

The company trades over the counter. At 4 p.m. EST, it fetched $3.31 a share on daily volume of 6,151 shares, according to

Former TouchIT Chief Executive Andrew Brabin declined to comment. An SEC spokeswoman also declined to comment on Bitcoin Shop's filing.

Bitcoin Shop CEO Charles Allen said the company raised $1.875 million from institutional and high-net-worth investors in conjunction with the filing.

He said that the company decided to become publicly traded in part to gain publicity. "We think it brings us legitimacy," Mr. Allen said.

The filings come at a crucial time for bitcoin, after a year in which the currency's price in U.S. dollars soared from $13.30 on Jan. 1 to $757.50 by the end of the year, according to CoinDesk, which averages bitcoin prices across multiple exchanges. On Thursday afternoon, the currency traded at $790.40, according to CoinDesk.

Bitcoin has recently attracted intense scrutiny from regulators who worry the virtual currency can be used to launder money or buy illegal goods.

Bitcoin Shop's filing also comes as other bitcoin-related companies labor to bring their own investments to market. The Winklevoss Bitcoin Trust, a proposed exchange-traded fund that would hold bitcoins, filed its registration with the SEC last July. Evan Greebel, a lawyer with Katten Muchin Rosenman LLP who represents the fund, said that the process was going "smoothly" but that he couldn't comment on when the fund might come to market.

Anna Pinedo, a securities lawyer with Morrison Foerster in New York, said the reverse merger effectively allowed Bitcoin Shop to become publicly listed without going through the standard SEC review process, which she described as time consuming.

Ms. Pinedo said that over the last few years, the Nasdaq Stock Market and New York Stock Exchange have made it considerably more difficult for a company that uses a reverse merger to become listed on their exchanges.

Now, Bitcoin Shop Inc. trades under the ticker TUCND. On March 5, its ticker will change to "BTCS," according to the filing.

In past years, reverse mergers have been popular among China-based companies looking to be traded in the U.S., said Joseph Grundfest, a professor at Stanford Law School who has researched the practice.

"It typically arises when companies calculate that it is the cheapest and fastest way to the public market," he said.
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