Basis, a US-based cryptocurrency developer backed by internet and technology conglomerate Alphabet, yesterday revealed it was winding down just seven months after its launch due to regulatory issues.
Basis was working on a stablecoin, a type of digital currency that maintains the same price, as opposed to rival offerings such as Bitcoin where the price can fluctuate wildly, making them difficult to use them as a payment method.
In the case of Basis, the digital coins would have been tied to the value of the US dollar on a one-to-one ratio.
However, the company ran into regulatory headwinds including the potential problem of having to register its tokens as securities, and enforcing transfer restrictions that could have opened up the platform to censorship.
Basis raised $133m through a private placement in the form of a simple agreement for a future tokens offering backed by Alphabet’s GV investment vehicle and multi-corporate-backed Digital Currency Group, in April this year.
Bain Capital Ventures, Lightspeed Venture Partners, Foundation Capital, Andreessen Horowitz, Wing VC, NFX Ventures, Valor Capital, ZhenFund, INBlockchain, Ceyuan Ventures, Sky9 Capital and assorted angel investors were also among the company’s backers.
Basis retained most of the money in escrow and was not allowed to touch it until the coin was launched, and as such it will return almost all of the funding to investors, though a precise figure could not be ascertained.
