A Crypto Firm Raises $325 Million for a Chemical Plant
RCL Chemical transferred its first loan installment to Pike County from a $400,000 loan it received in 2014. The company promised hundreds of job opportunities in Eastern Kentucky through a chemical plant which would convert natural gas into numerous liquid products.
The payment money, $50,000 was raised through an unconventional source, i.e., digital currency. An industry which has faced heated repercussions from the U.S. Securities and Exchange Commission.
In May, Y2X Infrastructure, a virtual currency investment company based in New York, agreed to pay $325 million as funding for RCL’s natural gas conversion plant in Eastern Kentucky. Y2X was also created less than a month ago which defines itself as a “blockchain-centric company,” that uses digital currency to fund promising projects.
William Johnson, RCL Chairman, and Chief Operating Officer said that his company used Y2X’s funding to pay its loan. In August 2014, the country agreed to RCL’s proposal and funded $400,000 for kick starting its operation and rejuvenating its economy.
As per Pike County’s deputy judge-executive, Herbie Deskins, the decision commenced friction between Pike and Floyd counties that caused a delay in the project. Afterward, a lawsuit was filed against RCL by Pike County Fiscal Court that did not proceed with the protocol. Deskins said, “If a lawsuit had been filed when they first wanted to, it would’ve bankrupted the project,” Deskins said.
However, Pike and Floyd County Officials complimented the decision as the plant would provide hundreds of jobs amidst a decrease in coal employment to 4,042 in 2017 from 13,679 in 2011. At that time Ben Hale, Floyd County Judge-Executive, “It could change the face of our coal economy,”
Project’s future now entirely depends on the cryptocurrency investment model and Infrastructure developed by Y2X. On the other hand, Jay Clayton, SEC Chairman, advised investors to be careful of crypto-based companies as their legality and trustworthiness has not been determined.
Clayton said, “A number of concerns have been raised regarding the cryptocurrency and (initial coin offering) markets, including that, as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation.”
Meanwhile, Y2X avoided any comments on its dealings and investment model.
The success of the project is still doubtful as a 2017 study by researchers at the MIT Joint Program on the Science and Policy of Global Change stated that natural gas to liquid projects could not survive in the long run. Jonson noted that company’s Floyd plant would focus on producing specialty waxes instead of other fluids. The waxes can be used in various products including shampoo and candles.
He added that Floyd County would become the first to develop such products in North America. He hopes that construction will start this fall. Jonson believes that his company would survive in the long run as their arrival has already been late. If the project becomes a success, more companies would expect Y2X to fund their projects making it as important as venture capitalists.