Appraisal Economics has determined the fair market value of restricted blockchain tokens that are not yet publicly traded in connection with Section 83(b) of the Internal Revenue Code. The blockchain technology underpins cryptocurrencies such as Bitcoin and Ether, and the recent surge in popularity has resulted in other entities issuing blockchain-based units, often issued as compensation to employees and advisors. As part of our valuation, we reviewed the firm’s white paper, management’s projections, the restricted token award agreement, and the advisor agreement. Then, we analyzed the failure rates of new companies and rates of return by venture capital investors that invest in early-stage, high-risk investments similar to the tokens to determine the probability-weighted expected payoff to a holder of the tokens and a discount rate to account for the time value of money. Our report was used to facilitate a Section 83(b) election for federal income tax purposes.

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