Block.One, the blockchain-based parent company behind fifth largest cryptocurrency by market capitalization EOS, has announced a buyback in shares for early investors that will constitute over 6500 percent in returns.
After raising a record-breaking $4 billion in the EOS token sale, the startup is looking to give some significant return on investment back its original investors. Among the early backers are a slew of billionaires and powerful players in Silicon Valley, including Peter Thiel, Alan Howard and Louis Bacon.
The Block.One buyback is purported to return as much as 6,567 percent to early investors, a stunning ROI even for Thiel who co-founded PayPal. As Bloomberg put it, a $100,000 stake in Block.One would translate to $6.6 million in the buyback–numbers largely unheard of in the traditional markets and doubly impressive given the crypto winter for coin prices throughout 2018.
Tom Shaughnessy, co-founder of crypto research firm Delphi Digital, told Bloomberg that EOS is “very much the odd one out in the crypto market,” owing the coin’s performance throughout last year’s bear cycle. While the majority of coin projects experienced losses of 90 percent or more, EOS fell close to 70 percent from it’s all-time high in April 2018. The currency is also up 125 percent since the start of 2019, compared to Bitcoin’s 90 percent rise during that same time.
While Block.One’s EOS has positioned itself as a cryptocurrency solution of the future, with plans to launch a social media platform later this year, some analysts have begin to question what the company is doing with the billions under control. In February, Bloomberg reported obtaining a letter to shareholders claiming that the company held $3 billion in cash and investments, with most of the holdings being invested in U.S. government bonds.
In the same letter, Block.One claimed that market volatility throughout 2019 had severely impacted its cryptocurrency portfolio, cutting it in half to $500 million. While coin prices had experienced some uptick since the beginning of the 2019, February was still in the throes of the crypto winter with sentiment towards digital assets at a relative low.
Interestingly, Block.One also claimed to hold 140,000 BTC in its cryptocurrency portfolio, making it one of the largest holders holders of Bitcoin in addition to its massive position in EOS. With coin prices across the market rising markedly since the start of April, the company issued an email this week stating their cryptocurrency losses were “more than fully recovered.”
Richard Burton, founder of San Francisco-based Balance.io, commented to Bloomberg,
“[Block.One] designed a very clever mechanism to hoover up as much capital as possible. Bitcoin was started on a shoestring and Ethereum raised just a few million dollars, which goes to show you don’t need anything like the money Block.one raised to launch and scale a successful network. It should be beholden on them to explain why they needed that much and what they are doing with it.”
During its 2017 seed round, Block.One was valued at $40 million. Now, following the announcement of a 10 percent buyback, the company’s stock is valued at $2.3 billion, constituting a repurchase of $1500 per share versus the $22.50 early investors paid.