SecProbe.io

CORRESP
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filename1.htm

BTCS
Inc.

1901
North Moore Street, Suite # 700

Arlington,
Virginia 22209

January
4, 2017

Via
EDGAR

Maryse
Mills-Apenteng

Special
Counsel

Office
of Information Technologies and Services

Division
of Corporation Finance

U.S.
Securities and Exchange Commission

Washington,
DC 20549

    Re:
    BTCS
    Inc.

    Preliminary
    Information Statement on Schedule 14C

    Filed
    December 16, 2016

    Revised
    Preliminary Information Statement on Schedule 14C

    Filed
    December 20, 2016

    File
    No. 000-55141

Dear
Ms. Mills-Apenteng:

Please
find our responses to the comments received from you in your letter dated December 23, 2016 related to the Preliminary Proxy Statement
on Schedule 14C, filed December 16, 2016 (as revised December 20, 2016), for BTCS Inc. (the “Company”). We have reproduced
your comments below.

General
Information

Does
any person have an interest in the adoption of the Reverse Split?, page 2

    1.
    We
    note that a number of shares of common stock and warrants will become issuable upon the consummation of the reverse stock
    split. Please provide tabular disclosure that identifies each of your contractual agreements to issue additional shares or
    warrants and the number of shares or warrants that will become issuable under each agreement upon consummation of the reverse
    stock split.

Response
to Comment No. 1:

As
revised, the Preliminary Proxy Statement includes the following additional disclosure (please see page 3):

The
specific contractual agreements pursuant to which we will issue additional shares following the reverse stock split, and the number
of shares issuable under each (share numbers are post-split), are listed in the table below. The obligation to issue the shares
existed prior to the reverse stock split, but the shares were previously unissuable because the Company lacked sufficient authorized
capital.

Maryse
Mills-Apenteng

Special
Counsel

Securities
and Exchange Commission

January
4, 2017

Page
2

    Contractual
                                         Agreement

      Shares
                                         issuable

    Subscription Agreement dated
    January 19, 2015 (Most Favored Nations adjustment – additional shares) Subject to reduction based on 4.99% ownership
    limitations.

      17,110,374

    Subscription Agreement dated January
    19, 2015 (Most Favored Nations adjustment – additional warrants)

      42,775,933

    Subscription Agreement dated April 20,
    2015 (Most Favored Nations adjustment – additional shares) Subject to reduction based on 4.99% ownership limitations.

      91,637,401

    Subscription Agreement dated April 20,
    2015 (Most Favored Nations adjustment – additional warrants)

      128,292,362

    5% Original Issue Discount 10% Senior
    Convertible Note Due September 16, 2016

      38,334,769

    Anti-Dilution Warrants Issuable Pursuant
    to Warrant Issued December 16, 2015

      97,423,577

    20% Original Issue Discount Junior Convertible
    Notes Due December 5, 2016

      7,481,482

    8% Convertible Notes Due June 6, 2017

      1,833,334

    Total
      424,889,232

    2.
    You
    disclose that you are in default with respect to certain of your debt obligations. Please provide more specific disclosure
    as to any penalties you have incurred as a result of this default. Investors should understand in practical terms the cost
    to the company of the failure to effectuate the reverse stock split and the resulting risks.

Response
to Comment No. 2:

Maryse
Mills-Apenteng

Special
Counsel

Securities
and Exchange Commission

January
4, 2017

Page
3

As
revised, the Preliminary Proxy Statement includes the following additional disclosure (please see page 4):

Because
we previously have been unable to comply with our contractual obligations to issue shares upon the conversion of convertible notes
and the exercise of warrants, we have defaulted under the terms of certain agreements with investors, which has caused the Company
to incur the following penalties:

Under
the terms of our 5% Original Issue Discount 10% Senior Convertible Note Due September 16, 2016 (issued in December 2015) in the
original principal amount of $1,450,000, our default on the repayment of the loan resulted in the application of a default interest
rate in the amount of 24% per year, the reset of the note conversion price to 60% of the lowest closing price on the OTCQB during
the prior 20 trading days, and the entire principal and interest of the notes, plus an additional 30% penalty, coming due immediately.
As of December 31, 2016, the face value of the senior notes, interest and penalties was $1,019,267 and is continuing to increase
by $579 a day. In addition, if holders of the notes attempt to convert their notes and are unable to, they will be entitled to
liquidated damages equal to $1,000 per day for each $100,000 of such purchaser’s original subscription amount. As of December
31, 2016, the Company is booking a liquidated damages liability of $2,856,500 with respect to the senior notes, which is continuing
to increase by $14,500 a day, even though no conversion requests have been made.

In
addition, under the terms of approximately 6.7 million (pre-split) warrants issued in December 2016 in connection with the note
issuances described above, the exercise price of each warrant was reduced to the default exercise price of the related notes,
and the warrant holders will also be entitled to damages for any buy-in occurring as a result of the Company’s failure to
deliver certificates upon an attempted exercise as described above.

Under
the terms of our 20% Original Issue Discount Junior Convertible Notes Due December 5, 2016 (issued in June 2016) in the original
principal amount of $125,000, a default occurred due to the default on our senior notes and resulted in the application of a default
interest rate in the amount of 24% per year, the reset of the note conversion price to 60% of the lowest closing price on the
OTCQB during the prior 20 trading days, and the entire principal and interest of the notes, plus an additional 40% penalty, coming
due immediately. As of December 31, 2016, the face value of the junior notes, interest and penalties was $199,267 and is continuing
to increase by $117 a day. In addition, if holders of the notes attempt to convert their notes and are unable to, they will be
entitled to liquidated damages equal to $1,000 per day for each $100,000 of such purchaser’s original subscription amount.
As of December 31, 2016, the Company is booking a liquidated damages liability of $228,750 with respect to the junior notes, which
is continuing to increase by $1,250 a day, even though no conversion requests have been made.

Maryse
Mills-Apenteng

Special
Counsel

Securities
and Exchange Commission

January
4, 2017

Page
4

Amendment
to our Articles of Incorporation to Effect a Reverse Split in a Ratio of 1-for-60

Purpose
of the Reverse Split, page 3

 3. You
                                         disclose that you issued one hundred shares of Series A Preferred Stock to Mr. Allen
                                         in order to effectuate the reverse stock split. Exhibit 3.1 to the Form 8-K filed on
                                         December 9, 2016 states that these shares have total voting power that is equal to one
                                         vote more than the total combined voting power of the common stock and all other series
                                         or classes of equity of the company. Moreover, we note that these shares may only vote
                                         on a proposal to increase the authorized shares of common stock or effectuate a reverse
                                         stock split. Please provide us with an analysis supporting your conclusion that this
                                         is permissible under Nevada law.

Response
to Comment No. 3:

Our
analysis of the relevant provisions of the Nevada Revised Statutes (the “NRS”) is set forth below.

The
ability of the Board of Directors (the “Board”) to designate a series of preferred stock is set forth in NRS 78.195,
which provides that a corporation’s articles of incorporation may

vest
authority in the board of directors to prescribe, the classes, series and the number of each class or series of stock and the
voting powers, designations, preferences, limitations, restrictions and relative rights of each class or series of stock

which
shall be described in the board resolution setting forth such designation and the certificate of designations filed with the state.1

The
Company’s Articles of Incorporation specifically adopt this provision of the NRS. Article III, Section 3(a) of the Company’s
Articles of Incorporation filed with the Nevada Secretary of State on April 15, 2008, as subsequently amended, provides that

The
board of directors is hereby vested with authority from time to time to provide by resolution for the issuance of shares of Preferred
Stock in one or more series… and to prescribe with respect to each series the voting powers, if any, designations, preferences,
and relative, participating, optional, or other special rights, and the qualifications, limitations, or restrictions relating
thereto.

1 NRS
78.195(1)

Maryse
Mills-Apenteng

Special
Counsel

Securities
and Exchange Commission

January
4, 2017

Page
5

It
further provides,

Unless
the board of directors provides to the contrary…. neither the consent by series or otherwise of the holders of any outstanding
Preferred Stock nor the consent of the holders of any outstanding common stock shall be required for the issuance of any new series
of preferred stock regardless of the whether the rights and preferences of the new series of preferred stock are senior or superior,
in any way, to the outstanding series of preferred stock or common stock.

Further,
under the NRS, the ability of the Board to structure the relative voting rights of the holders of that preferred stock, limit
those voting rights to particular matters, and make the Company’s redemption rights dependent upon the happening of a particular
corporate event are set forth in NRS 78.037, which provides that a corporation’s articles of incorporation may include provisions

creating,
defining, limiting or regulating…the rights, powers or duties of…any class of the stockholders.2

NRS
78.195 also provides that

the
voting powers, designations, preferences, limitations, restrictions and relative rights for the shares of a class or series of
stock may be made dependent upon any fact or event which may be ascertained outside the articles of incorporation if the manner
in which a fact or event may operate upon the voting powers

and
other rights is stated in the articles.3 A “fact or event” may include the

occurrence
of an event, including, without limitation, a determination or action by…the corporation itself.4

Further,
the directors of a corporation may take action

to
protect the interests of the corporation and its stockholders, including, but not limited to, adopting or signing plans, arrangements
or instruments that grant or deny rights, privileges, power or authority to a holder or holders of a specified number of shares
or percentage of share ownership or voting power.5

2
                                         NRS 78.037(2)

3
NRS 78.195(4)

4
NRS 78.195(5)

5
Id.

Maryse
Mills-Apenteng

Special
Counsel

Securities
and Exchange Commission

January
4, 2017

Page
6

Together,
the above provisions give the Company’s Board the authority to designate the Series A Preferred Stock, endow it with voting
rights superior to the common stock, provide that those voting rights are limited to voting on the Company’s reverse split
proposal, and provide that the stock is redeemable upon the Company’s amendment of its Articles of Incorporation to increase
available capital.

The
ability of the Company to effect its reverse stock split is set forth in NRS 78.2055, which provides:

Unless
otherwise provided in the articles of incorporation, a corporation that desires to decrease the number of issued and outstanding
shares of a class or series held by each stockholder of record at the effective date and time of the change without correspondingly
decreasing the number of authorized shares of the same class or series may do so if:

(a) The
board of directors adopts a resolution setting forth the proposal to decrease the number of issued and outstanding shares of a
class or series; and

(b) The
proposal is approved by the vote of stockholders holding a majority of the voting power of the affected class or series, or such
greater proportion as may be provided in the articles of incorporation, regardless of limitations or restrictions on the voting
power of the affected class or series.6

As
discussed above, the Company’s Articles of Incorporation, through the provisions authorizing the Board to designate a series
of preferred stock without shareholder approval, and the Company’s designation of Series A Preferred Stock with special
voting rights related to the capital increase, opt out of the default provisions of NRS 78.2055, as permitted by the language
“unless otherwise provided in the articles of incorporation,” to provide for the process utilized by the Company to
approve the reverse split.

Finally,
it was permissible for the Company to utilize a written consent action under NRS 78.320, which provides that

Unless
otherwise provided in the articles of incorporation or the bylaws, any action required or permitted to be taken at a meeting of
the stockholders may be taken without a meeting if, before or after the action, a written consent thereto is signed by stockholders
holding at least a majority of the voting power, except that if a different proportion of voting power is required for such an
action at a meeting, then that proportion of written consents is required.7

6
                                         NRS 78.2055(1)

7
NRS 78.320(2)

Maryse
Mills-Apenteng

Special
Counsel

Securities
and Exchange Commission

January
4, 2017

Page
7

Effects
of the Reverse Split, page 3

    4.
    Please
    expand the table on page 3 to describe your capitalization both before and after the reverse stock split, taking into account
    your discussion on page 2 regarding the interest of certain persons in the adoption of the reverse split. The revised table
    should include the number of shares (i) authorized (ii) issued and outstanding, and (iii) reserved for issuance both before
    and after the reverse stock split. Please also include the number of shares available for issuance before and after the split.

Response
to Comment No. 4:

As
revised, the Preliminary Proxy Statement includes the following tabular disclosure (please see page 5):

The
number of shares of our common stock authorized, outstanding and reserved for issuance before and after the reverse stock split
are detailed below:

    Authorized
    Issued
    and Outstanding (1)
    Reserved
    for Issuance (2)
    Available
    for Issuance

    Before
                                         Reverse Split

      975,000,000
      952,756,004
      22,243,996
      0

    After
                                    Reverse Split

      975,000,000
      15,879,267
      425,259,961
      533,860,772

    (1)
    Issued
    and outstanding shares before Reverse Split and after Reverse Split exclude 13,000,000 shares and 216,667 shares, respectively,
    held in treasury which are reserved for issuance.

    (2)
    Excludes
    shares that may need to be issued based on further resets of the note conversion prices or favored nations provisions.

The
number of shares of owned and owed to interested persons is detailed below:

    Before
    Reverse Split

    (Excludes Owed Securities)
    After
    Reverse Split