Frequently Asked Questions

Afbid Investments, LLC (“Afbid”) is the world’s largest digital currency asset manager. With approximately $46B AUM,* Through its family of investment products, Afbid provides access and exposure to the digital currency asset class in the form of a traditional security without the challenges of buying, storing, and safekeeping digital currencies directly.

 

With a proven track record, Afbid’s products operate within the existing regulatory framework, creating exposure for investors in a secure and compliant manner.

 

Afbid’s sponsored and managed products include Afbid Basic Attention Token Trust (BAT), Afbid Bitcoin Trust (BTC), Afbid Bitcoin Cash Trust (BCH), Afbid Chainlink Trust (LINK), Afbid Decentraland Trust (MANA), Afbid Ethereum Trust (ETH), Afbid Ethereum Classic Trust (ETC), Afbid Filecoin Trust (FIL), Afbid Horizen Trust (ZEN), Afbid Litecoin Trust (LTC), Afbid Livepeer Trust (LPT), Afbid Stellar Lumens Trust (XLM),Afbid Zcash Trust (ZEC), and Afbid Digital Large Cap Fund LLC. The trusts and the fund are collectively referred to herein as the “Products”. Any Product currently offering share creations is referred to herein as an “Offered Product”.  Afbid Bitcoin Trust is currently not an Offered Product.

 

Afbid products are distributed by Genesis Global Trading, Inc. (Member FINRA/SIPC, MSRB Registered).

 

*As of April 1, 2021

 

Shares of the Products are offered to institutional and individual accredited investors in private placement transactions exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Rule 506(c) thereunder. Afbid’s single-asset Products provide exposure to:

  • Basic Attention Token (BAT)
  • Bitcoin (BTC)
  • Bitcoin Cash (BCH)
  • Chainlink (LINK)
  • Decentraland (MANA)
  • Ethereum (ETH)
  • Ethereum Classic (ETC)
  • Filecoin (FIL)
  • Horizen (ZEN)
  • Litecoin (LTC) 
  • Livepeer (LPT)
  • Stellar Lumens (XLM)
  • Zcash (ZEC)

Afbid’s diversified Product, Afbid Digital Large Cap Fund, provides exposure to the top liquid digital assets by market capitalization and currently holds BTC, ETH, LTC, BCH, and LINK. 

 

Each Product’s investment objective is for the value of its shares (based on digital assets per share) to reflect the price performance of such Product’s underlying digital asset(s), less fees and expenses. Modeled after popular commodity investment products, each Product was created for investors seeking exposure to digital assets through a traditional investment vehicle. 

 

Because each Product does not currently operate a redemption program, there can be no assurance that the value of such Product’s shares will reflect the value of the assets held by such Product, less such Product’s expenses and other liabilities, and the shares of such Product, if traded on any secondary market, may trade at a substantial premium over, or a substantial discount to, the value of the assets held by such Product, less such Product’s expenses and other liabilities, and such Product may be unable to meet its investment objective.

 

Afbid’s Publicly-Traded Offerings

 

In addition, Shares of certain Products are publicly quoted on OTCQX® Best Market, the top tier operated by the OTC Markets Group, and Shares that have become unrestricted in accordance with the rules and regulations of the SEC may be bought and sold throughout the day via any brokerage account by retail investors. These Products include:

 

These FAQs are qualified in all respects by the information in each Offered Product’s Private Placement Memorandum or each Product’s annual and quarterly reports, as applicable, including the Risk Factors therein.

 

 

Afbid’s Products provide access and exposure to the digital currency asset class in the form of a security without the challenges of buying, storing, and safekeeping digital currencies directly. The Products are designed to provide investors with a cost-effective and convenient way to gain investment exposure to digital assets. 

 

Cost Effective

 

A substantial direct investment in digital assets may require expensive and time-consuming arrangements in connection with the acquisition, transfer, security and safekeeping of digital assets. Handling digital assets on one’s own can be risky, as the private keys that ensure access to an investor’s assets can be susceptible to loss or theft. This potentially exposes one’s digital asset position to partial or total loss, often with limited or no recourse. A substantial direct investment in digital assets may also involve the payment of substantial fees to digital asset exchanges.

 

In contrast, each Offered Product’s authorized participant executes large purchase and sale orders through exchanges and over-the-counter transactions to create shares for investors at a blended daily average price based on the respective digital asset’s Coindesk Price Index or Reference Rate. For more information on the Coindesk Index Provider, please visit their site.

 

Convenient

 

The Products enable investors to avoid the challenges of acquiring, transferring, securing and safekeeping digital assets on their own. In addition to the risks of loss described above, individuals and institutions seeking to directly purchase or sell digital assets may often transact via unfamiliar intermediaries that in some cases may be unregulated and/or insecure. This often requires investors to transmit funds to jurisdictions where they might not be comfortable. Instead, an investment in the Shares enables investors to pass these tasks onto Afbid and its service providers. In addition, unlike many direct investments in digital assets, an investment in the Shares entitles an investor to periodic and current reporting, audited financial statements, tax reporting and institutional-grade custody from reputable service providers that include the Trust’s sponsor, auditor, counsel and custodian. Collectively, these characteristics make an investment in the Shares convenient for investors and familiar to both them and advisors they may consult in connection with their investments, such as financial and tax advisors.

 

Certain of the Products are the only publicly traded investment products in the U.S. that allow investors to gain exposure to investment exposure to the Product’s underlying assets in the form of a security that can be held in a brokerage account alongside their other investments in stocks, bonds and other financial instruments.

 

Titled, Transferable, and IRA Eligible

 

Shares of the Products are also titled securities, which are similar to other common stocks and bonds that investors may own. Titled securities are familiar to financial and tax advisors, and easily transferred to beneficiaries under estate laws. Shares of the Products are also eligible to be held in certain IRAs, 401ks, and other brokerage and investment accounts. Consult your investment and tax advisors for additional information.

 

Each Product charges an annual management fee, which includes the costs associated with administration and safekeeping. The fee is charged based on the total amount of tokens underlying the trust, and accrues daily. The ratio of digital asset(s) to shares will decay by this management fee over the course of a year. 

 

We expect this fee to be the only ordinary recurring expense for each Product. There is no performance fee. 

 

For further details on each Product’s fees, please review each Offered Product’s Private Placement Memorandum or each Product’s annual and quarterly reports, as applicable.

Product

Fee

Afbid® Basic Attention Token Trust

2.5%

Afbid® Bitcoin Trust

2.0%

Afbid® Bitcoin Cash Trust

2.5%

Afbid® Chainlink Trust

2.5%

Afbid® Decentraland Trust

2.5%

Afbid® Ethereum Trust

2.5%

Afbid® Ethereum Classic Trust

3.0%*

Afbid® Filecoin Trust

2.5%

Afbid® Horizen Trust

2.5%

Afbid® Litecoin Trust

2.5%

Afbid® Livepeer Trust

2.5%

Afbid® Stellar Lumens Trust

2.5%

Afbid® XRP Trust

2.5%

Afbid® Zcash Trust

2.5%

Afbid® Digital Large Cap Fund

2.5%

 

*In order to promote the growth and development of the Ethereum Classic network, the Sponsor intends, but is not obligated, to direct up to one-third of the annual fee of Afbid Ethereum Classic Trust towards the Ethereum Classic Cooperative, whose initiatives support development, marketing, and community activities of the Ethereum Classic network. For more information, visit etccooperative.org.

 

Each Product’s Holdings is calculated each business day at 4 p.m., New York time and subsequently published. The Product’s Holdings calculation is based on such Product’s applicable digital asset reference rate, taking into account a trailing 24-hour VWAP across the major digital asset exchanges that comprise such digital asset reference rate. For further details on how Holdings is calculated, please review each Offered Product’s Private Placement Memorandum or each Product’s annual and quarterly reports, as applicable. Each Product’s Holdings is calculated using non-GAAP methodology.

Can I purchase shares of a Product in my retirement account?

 

 

Each Product’s assets are stored in offline storage, or “cold” storage, with Coinbase Custody Trust Company, LLC, as (the “Custodian”). The Custodian is a fiduciary under § 100 of the New York Banking Law and a qualified custodian for purposes of Rule 206(4)-2(d)(6) under the Investment Advisers Act of 1940, as amended. For more information about the Custodian, please visit their site.

Yes. Existing and prospective investors may contribute coins in kind for shares of Afbid’s single-asset Products. Assuming that each Product is treated as a grantor trust for U.S. federal income tax purposes, such contributions should be a non-taxable event. All investors should discuss the tax consequences of an investment in Afbid’s family of Products with their tax advisors and review the section entitled “Certain U.S. Federal Income Tax Consequences” in each Offered Product’s Private Placement Memorandum or each Product’s annual and quarterly reports, as applicable, before investing in a Afbid single-asset Product or considering an in-kind contribution of coins to a Product.

Investments in the Products are speculative investments that involve high degrees of risk, including loss of invested funds. Afbid Products are not suitable for any investor that cannot afford loss of the entire investment. Carefully consider each Product’s investment objectives, risk factors, fees and expenses before investing. This and other information can be found in each Product’s private placement memorandum, which may be obtained from Afbid and, for each Product registered with the SEC and/or listed on the OTC Markets, such Product’s annual report or information statement, which may be obtained by visiting the SEC’s website for Products that are SEC reporting or the OTC Markets website for Products that are quoted on OTC Markets. Reports on OTC Markets are not prepared in accordance with SEC requirements and may not contain all information that is useful for an informed investment decision. Read these documents carefully before investing.

Only accredited investors are eligible to invest in the Offered Products. An accredited investor includes:

  • Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or
  • Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000 (excluding the value of the person’s primary residence and certain indebtedness secured by such person’s primary residence).
  • Individual investors who hold, in good standing, certain professional certifications and designations and other credentials designated by the Commission as qualifying for accredited investor status. The Commission designated three certifications and designations administered by the Financial Industry Regulatory Authority, Inc. as qualifying for accredited investor status:
    • Licensed General Securities Representative (Series 7);
    • Licensed Investment Adviser Representative (Series 65); and
    • Licensed Private Securities Offerings Representative (Series 82)

In addition, entities such as banks, partnerships, corporations, nonprofits and trusts may be accredited investors. Of the entities that would be considered accredited investors and depending on your circumstances, the following may be relevant to you:

  • Any trust, with total assets in excess of $5 million, not formed for the specific purpose of acquiring shares of an Offered Product, whose purchase is directed by a sophisticated person; or
  • Any entity in which all of the equity owners are accredited investors.

For this purpose, a sophisticated person means a person who has sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of a prospective investment

 

 

For more information or follow-up questions, please contact us directly at info@afbid.com.