What model does Bitget's Pre-IPO follow? How is the compliance?

I have written many popular science articles on Pre-IPO. After finishing one on Binance yesterday, many friends messaged me to write about Bitget. I looked into it, and Bitget's Pre-IPO model is indeed a bit more complex.

To begin with the essence, Bitget's Pre-IPO project ultimately is also a type of SPV mirror (although slightly different). No investor can directly obtain stocks or stock-related rights from the investment project; only the price is traded.

Bitget's partner is Republic International Cayman (😂), and similarly, Bitget is just an entry point and not the underlying issuer itself. Holding preSPAX represents a debt instrument from the issuer to the holder, not actual shares of SpaceX, and it does not come with voting rights, dividend rights, or other shareholder rights.

This statement is quite interesting. Although it belongs to the SPV mirror, it still differs from traditional SPV mirrors. Republic's own definition of Mirror Token is actually more oriented towards "debt," not "equity."

Republic's Mirror Token is essentially an "unsecured or redeemable note" or "debt security" issued by RepublicX LLC. The return formula is pegged to the reference price of the common stock of a private company, but investors do not directly hold stocks of that company, nor do they directly hold a beneficial interest in a certain SPV.

More importantly, Republic has also stated that not only do investors not directly buy stock, but even RepublicX is not directly investing in the shares of these private companies.

In layman's terms, although Republic is selling the Pre-IPO of SpaceX, what investors are actually buying is not the real equity of SpaceX, but a debt note issued by RepublicX that is linked to SpaceX's performance. According to what Republic has publicly disclosed, at least within this structure, not only do investors not directly buy SpaceX stock, but the issuing entity RepublicX is also not directly investing in SpaceX's shares.

More accurately, Republic's Mirror Token does not allow investors to directly hold the underlying SPV or unlisted company equity, but is a structured debt note issued by RepublicX, guaranteed for redemption by the company holding SpaceX assets. What investors truly hold is a debt claim against RepublicX, and the redemption amount is calculated based on liquidity events such as future IPOs or acquisitions of the reference company and the reference price formula.

This indicates that Republic's structure is even further removed than traditional SPV mirrors. In traditional SPV mirrors, there is at least a legal entity holding the shares below, and what is purchased is the rights mapped out by this legal entity. However, in Republic's public statements, users receive a debt security issued by RepublicX LLC.

Upon reading this, I actually feel that this logic is a bit too complicated. In the past, whether it was SPV or SPV mirrors, it has mostly been about buying corresponding targets through intermediaries, such as SpaceX, then tokenizing the purchased notes and selling them, which is a regular process. Although there are compliance issues, most people play it this way, and they all publicly claim to hold the underlying notes of SpaceX.

Overall, Republic is selling a "debt-based SPV mirror."

The Republic official website states that related securities activities involve registered brokers like OpenDeal Broker LLC, a member of FINRA and SIPC. However, Republic's own secondary market terms also clearly state that Republic's secondary market itself is not a registered national securities exchange, nor is it a regulated trading system under Rule ATS.

So, on the business line of selling tokenized Pre-IPO securities, Republic does have some compliance infrastructure and licensing resources, but there are many restrictions. This is also why Republic collaborates with third-party platforms like Bitget (heard it's an exclusive partnership 🤣).

In short, what investors are buying is still a token based on the price fluctuations of SpaceX. However, Republic has previously completed Pre-IPOs for well-known companies like Neuralink, Kraken, Stripe, and Revolut, which lends a better reputation and public image in the industry. For friends out there, how to choose still depends on your own situation. Essentially, there is not much difference.

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