Series V Update
Effective November 1, 2023, in response to the evolving regulatory landscape in the U.S., Upstream announced its decision to suspend the ability of U.S. individuals to engage in securities trading activities, including buying, selling, or depositing securities on the platform. As a result, U.S. holders of Series V shares are currently unable to transfer them to Upstream. Any U.S. holders who had previously transferred their Series V shares onto Upstream have had their shares returned to our transfer agent, Equity Stock Transfer.
At the 2024 annual meeting, BTCS shareholders approved a proposal authorizing the Board of Directors, at its discretion, to convert each share of Series V Preferred Stock into one share of Common Stock. While the Board now has the authority to implement this conversion, it has not yet taken such action. Multiple factors, including potential tax implications, market response, and Nasdaq-related costs, influence the timing and feasibility of the conversion. Until the Series V shares are either converted into common stock or otherwise listed for trading, they will remain in shareholder brokerage accounts, likely with no ascribed value.
The foregoing information is a summary of the amended Series V and related disclosures, is not complete, and is qualified in its entirety by reference to the full text of the amended and restated Series V Certificate of Designation and risk factors included on a Form 8-K filed with the Securities and Exchange Commission on April 19, 2023.
Timeline
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May 11, 2023
Ex-Dividend Date
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May 12, 2023
Record Date
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June 2, 2023
Payment Date
Frequently Asked Questions
What is the Series V Preferred stock?
The Series V Preferred stock was intended to be similar in some respects and superior in others to our common stock. Its key features are: i) its non-convertible, ii) perpetual, iii) has a 20% liquidation preference over our common stock, iv) eligible, at the discretion of the board, for dividends and/or distributions made to common holders, v) eligible, at the discretion of the board for, dividends and/or distributions up to 20% per annum, which the common shareholders would not be entitled to, vi) is treated as common stock in the event of a reorganization such as a merger, and vii) non-voting.
Why is BTCS distributing Series V to its shareholders?
BTCS distributed Series V Shares to all its shareholders as a step towards protecting investors, embracing blockchain technology for trade settlements, and rewarding long-time shareholders for their continued support. The distribution aimed to build a fundamental shareholder base, promote blockchain adoption, and create a pathway for every shareholder to seamlessly utilize blockchain technology in their daily lives.
BTCS had listed the Series V Shares on Upstream, which utilizes Ethereum’s blockchain that BTCS has been securing through its validator node operations since 2021.
The Upstream listing provides our Non-U.S. Series V holders transparent public order books, grant access to a global digital-first investor base, enable direct-to-investor communications, distributions, and dividends without friction, and eliminate: i) failures to deliver, ii) illegal naked shorting, and iii) phantom shares which we believe currently plague the market.
This move demonstrated BTCS’s commitment to delivering superior value to investors, acknowledging the loyalty of long-time shareholders, fostering innovation, and contributing to the potential future of fairer capital markets.
How many Series V Shares did I receive?
The Series V Shares was paid out at a ratio of 1:1, with one share of Series V issued for every one share of common stock.
When did I receive the Series V Dividend?
On or after the Dividend Payment Date, which was set for June 2, 2023. BTCS delivered the Series V Dividend via EST to DTC who then delivered them to your broker. How each individual broker then handled the Dividends is determined by the broker and is governed by your brokerage agreement. Some brokerage firms may have deposited your Series V quickly, while others may have taken several days to do so. If you have any questions about the distribution of your Series V Shares please contact your brokerage firm.
Was the Dividend payable in U.S. dollars or in cryptocurrency?
Neither. The Dividend was a stock dividend, and the Series V that was issued in the Dividend was uncertificated securities. The Series V that was paid in the Dividend was not cryptocurrency. Please note that shareholders were not be required to pay any consideration in order to receive the Series V Shares.
Did I need to do anything to receive the Series V Dividend?
No, investors were not required to take any action in order to receive the Dividend. On or after the Payment Date, investors should have seen their Series V Shares reflected in their brokerage or other financial institution accounts in which they hold their BTCS common stock. Some brokerage firms may have deposited your Series V quickly, while others may have taken several days to do so. However, if that did not happen, you should immediately contact your broker.
Holders of record automatically received the Series V Shares in book-entry form on or about the Payment Date.
What happens if I do nothing?
Investors were not required to take any action in order to receive their Series V Shares. On the Payment Date, investors should see their Series V Shares reflected in their brokerage or other custodial accounts in which they hold their BTCS common stock. See above Q&A for timing on when it was expected brokerage firms deposited your Series V.
How was the issuance of the Series V Dividend taxed?
In the United States, the BTCS Series V dividend was not expected to be a taxable dividend. An IRS Form 8937 was published on our website here: www.btcs.com/taxforms/. Tax laws do vary from country to country, and international shareholders should check the laws in their respective countries. The above does not constitute tax advice and you should consult with a tax professional.
Did the receipt of the Dividend into an IRA account constitute a distribution for tax purposes?
Assuming that the Dividend was not directed or paid to the IRA owner in his or her individual capacity and, instead, the Dividend was retained by the custodian for the IRA, such Dividend should not have been considered a distribution of the IRA for purposes of the Internal Revenue Code.
IMPORTANT: Individuals that received Series V Shares into an IRA should consult with their own IRA custodians or tax advisers in determining appropriate tax treatment of the Series V Shares.