Private Placements in Crypto
By TruthCoin/Bitcoin 2.0
Many have never heard of private placements. Especially with cryptocurrency. Private Placements are more common in the stock market. It’s when publicly listed companies may wish to raise further capital. They sometimes will offer private placements (off-market transactions) to sophisticated investors, generally on investment banking high net worth client lists or existing stockholders.
So what they’ll do via brokers generally is offer a discount for their stocks/shares to existing shareholders and select investors.
So if their stock price is saying $1. They may issue a private placement at say $0.60 cents. It means existing investors and select others can buy them cheaply, below the existing trading price.
They’ll often come with an escrow period, i.e. a period where you can’t sell the stock, to stop the price from dropping immediately from investors buying at $0.60 cents and trying to dump them on the market instantly at $1.00.