Sioux Falls startup aims to become big player in cryptocurrency trading

By Rob Swenson, for SiouxFalls.Business

The rise of Bitcoin and other cryptocurrencies was one of the biggest financial stories of 2017, and the continued development and gradual acceptance of digital assets are likely to keep grabbing attention in 2018.

More companies are engaging in or exploring the benefits and risks of participating in the emerging area of e-commerce.

Sioux Falls is home to an ambitious startup, CoinLion, which is developing a website that the company hopes will become “the most trusted, powerful, simple and rewarding digital-asset trading and management platform.”

The company envisions itself becoming the E-Trade or Charles Schwab of cryptocurrency.

CoinLion is raising money to fully build out its platform and service offerings by selling digital tokens called Lion. The tokens will enable buyers to access services and discounts on the website. Traders also will have opportunities to sell information such as research and investment strategies on the site.

CoinLion began preselling tokens Nov. 30. The formal sales period runs from Dec. 18 to Feb. 25, 2018.

The company expects to complete its platform and make it available for trading activity by July, if it succeeds in raising $1 million during its token sale.

Company executives don’t expect reaching the minimum sales level to be a problem. But if the minimum threshold is not reached, the funds will be returned. No more than 25 million tokens will be sold.

Existing exchanges do not provide users with the tools, research and education they need to make smart decisions, according to CoinLion executives.

“Managing and trading digital currency is messy and inefficient. That’s why we built CoinLion, to support controlled, disciplined investment processes and meet the demands of traders in the expanding digital-currency marketplace,” said Joshua DeWitt, CEO and co-founder of CoinLion.

“We’re following best practices and adding our own spin,” he said.

The value of a Lion token fluctuates, but it recently was worth about a dime. The value is tied to Ethereum, or ETH, a leading cryptocurrency. One ETH is worth 3,500 Lion.

CoinLion says it will maintain a 50-50 distribution of tokens between buyers and CoinLion. The company will destroy tokens it holds to maintain the 50-50 balance.

Cryptocurrencies, which are largely unregulated, are digital ledgers built on blockchain technology. They allow two parties to exchange value without going through a bank or some other middle party.

Bitcoin, the best known of hundreds of cryptocurrencies that have emerged around the world, has jumped to new highs in value in recent months. Some national financial experts, however, worry about its volatile tendencies and the long-term viability of digital currencies.

Some big-name national companies, such as Microsoft, accept Bitcoin in exchange for some services, however, and the number of businesses accepting cryptocurrency is growing.

Beds by Design, a mattress factory and store in Sioux Falls, recently announced that it will accept Bitcoin, Ethereum and Litecoin for payment. Beds by Design believes it is the first company in South Dakota to accept cryptocurrencies.

The store’s ability to accept cryptocurrencies puts it on the cutting edge in how it can accept payment, said owner Chad Yde.

“We’re all about making things convenient and easy in every way possible for our customers,” he said.

Eide Bailly LLP has an internal task force studying the use of currencies based on blockchain technologies.

More than 1,000 cryptocurrencies exist around the world. Some might be good, and others may not last, said Eric Pulse, a principal and director of risk advisory services for Eide Bailly.

“Only time is going to tell the viability, long term, of any of these currencies,” Pulse said.

CoinLion’s executive team: Justus Luthy, CTO; Joshua DeWitt, CEO; Zach Neugebauer, CMO; and Caleb Veldhouse, COO.

CoinLion team members are convinced that good cryptocurrencies will not only last but also will change world commerce. The company’s offices are at 2004 N. Westport Ave., but CoinLion does not expect to offer storefront services. It is an online business.

DeWitt, the CEO and co-founder, has a master’s degree in security analysis portfolio management. He also has eight years of experience in financial services.

Other CoinLion officers and primary owners are:

  • Caleb Veldhouse, COO and co-founder. He has MBA and law degrees and seven years of business experience.
  • Justus Luthy, CTO and co-founder. He has 25 years of experience in software development.
  • Zach Neugebauer, CMO. He has 13 years of experience as a CEO and business owner.

The company has five full-time employees, plus other associates. It expects to have 15 or 16 employees after the token sale has been completed. The company also has several prominent advisers, include Jeffrey Hayzlett, a businessman from Sioux Falls who has become known internationally as a TV and radio host and as an author and speaker. Hayzlett’s public relations company, Tallgrass Public Relations, represents CoinLion. Tallgrass has offices in New York, Los Angeles and Sioux Falls.

Other CoinLion advisers include former U.S. Rep. Max Sandlin, general counsel of Mercury, an international public strategy firm; Ashley Podhradsky, associate professor of digital forensics at Dakota State University in Madison; and Will Bushee, vice president of BrightPlanet, a web data company in Sioux Falls. There are a total of eight advisers from South Dakota and beyond. They are paid to advise and promote the company.

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Sioux Falls startup aims to become big player in cryptocurrency trading

This company envisions itself becoming the E-Trade or Charles Schwab of cryptocurrency. And it’s based in Sioux Falls.

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