Immutable’s Foundation “Quietly” Looks to Raise Cash For IMX Tokens: Report

The foundation tasked with promoting development on Ethereum Layer-2 project, ImmutableX, is reportedly trying to sell a certain amount of its IMX tokens to private investors.

Digital Worlds Ltd. NFTS, a Cayman Islands-based non-profit foundation, which issues the IMX token, is technically separate from the Immutable Group, the Australian startup which develops the blockchain, and Immutable previously disclosed a partnership with Digital Worlds to reward developers and community members with IMX tokens.

A spokesperson for Immutable, reached for comment after publication, noted “the sale proceeds will all go to the Foundation, not Immutable.”

Immutable co-founder James Ferguson is listed as the entity’s director, Australian Financial Review reported Tuesday.

Immutable has so far raised nearly $280 million from investors including Tencent, Alameda Research, AirTree Ventures and Arrington XRP Capital, according to Crunchbase.

According to the foundation’s pitch, the impending dominance of tokenization “will turn NFTs into a trillion-dollar asset class.”

The project says that the non-profit has a “$1BN+ war chest for grants.” 

Latest figures show Immutable holds IMX tokens worth over $478 million on its own balance sheet, AFR said. According to the project’s website, there are a total of 2 billion IMX tokens, and nearly 20% of these are intended to be just for token sales.

The Immutable spokesperson put the value of IMX on the company’s balance sheet at $530 million, and added that Immutable “has never sold any of these tokens and is a long term holder.”

The pending sales, are from Digital Worlds reserve allocation of 4% of total token supply.

It’s not uncommon for a crypto company to promote and sell its own tokens to investors, as a way to raise capital. Token sales are seen as a popular route for projects to allow investors to get involved in their startups, despite lingering legal uncertainty as to their possible status as unregulated securities in the United States.

According to the Immutable white paper, the IMX is used to pay transaction fees on the protocol, and may be staked to capture a portion of those fees subject to certain activity requirements in governance participation and trading.

A spokesperson told AFR that the private token sale was being led by a major venture capitalist and that it was “more than two times oversubscribed in the first 72 hours.” The project declared that Ferguson’s association with Digital Worlds is only in a personal capacity.

News of the private token sale comes less than two weeks after it emerged that Immutable was laying off 11% of staff. The startup cited low cash reserves as the reason for the move, the Sydney Morning Herald reported, with plans to transfer the responsibility of some areas of game development to external partners.

Immutable disputes that, saying the company has a 4-year cash runway and instead wanted to allocate more resources to the most critical parts of the business. “[The latest token sale] is in no way related to the small redundancy round by Immutable last month,” the spokesperson said.

IMX is up about 170% since the start of 2023, according to data compiled by Blockworks.

Updated March 8, 2023 at 5:03 am ET: Added comments from Immutable spokesperson and clarification around the purpose of the foundation and its token sales.

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