SecProbe.io

United States securities and exchange commission logo
December 21, 2022
Shy Datika
President and CEO
INX Ltd
Unit 1.02, 1st Floor
6 Bayside Road
Gibraltar, GX11 1AA
Re:INX Ltd
Form 6-K
Filed November 15, 2022
File No. 000-56429
Dear Shy Datika:
            We have reviewed your filing and have the following comments.  In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.
            Please respond to these comments within ten business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.  To the
extent our comments request disclosure to be made in future filings, please provide in your
response the disclosure you propose to include in future filings.
            After reviewing your response to these comments, we may have additional comments.
Current Report on Form 6-K filed November 15, 2022
General
1.We note that you operate a crypto asset platform, INX.One, and that you offer crypto
asset-related products and services, including the INX Token, the INX ATS, capital
raising services (e.g., minting and issuing crypto assets) as well as the ability to exchange
AVAX, BTC, CRV, ETH, FTM, GYEN, LTC, MANA, MATIC, LINK, SAND, UNI,
USDC, ZEC, and ZUSD on INX.One.  In future filings, please identify all of the crypto
asset services that you provide for each crypto asset.  In this regard, we note your
disclosure that you continue to expand your product offerings available on INX.One.
Please also identify the jurisdictions in which these crypto assets and your crypto asset
products and services are currently available.  In this regard, we note your disclosure that

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you continue to expand your service offerings to customers from more jurisdictions and
globally and that, during the third quarter, you added six countries to the approved
jurisdictions.  Please consider using a table or a chart to show the various crypto assets,
crypto asset products and services and the jurisdictions in which each is available.
Similarly, please identify the fiat currencies that may be used on your platform.
2.We note that you are not authorized or permitted to offer your products and services to
customers outside of the jurisdictions where you have obtained the required governmental
licenses and authorizations.  In future filings, please describe any material risks you face
from unauthorized or impermissible customer access to your products and services outside
of those jurisdictions.  Describe any steps you take to restrict access of U.S. persons or
persons in other jurisdictions to any of your products and services and any related material
risks.
3.In future filings, please disclose the risks and limitations of your internal policies and
procedures for determining whether or not a crypto asset is a security, including that they
are risk-based judgments made by the company and not a legal standard or determination
binding on any regulatory body or court.
4.We note that you mint, issue and facilitate secondary trading of crypto asset securities.  In
future filings, please disclose your policies and procedures for ensuring that the issuance
and secondary trading of crypto asset securities are in compliance with the federal
securities laws, and please add risk factor disclosure that addresses potential liability if
they are not.  To the extent that a customer has traded book-entry securities and
is using your services to mint and issue tokenized shares of the same class of securities as
the book-entry securities, please disclose your policies related to ensuring that the
customer may do so, including whether the company may issue the same class of
securities in different forms (e.g., as book-entry and crypto assets) and whether the rights
and obligations of the tokenized shares are different from the non-tokenized shares such
that the tokenized shares are actually a separate class of securities.
5.In future filings, please disclose the process you used to decide to add the Millennium
Sapphire token to your ATS, and to adding Compound and Aave to your platform.  Your
discussion, should both be general to your process for adding any such crypto asset
securities and cryptocurrencies, as well as the specifics involved in adding these, and any
others you have added for the financial period covered.  For example, please clarify
whether you make available crypto asset securities on your ATS that you did not mint for
your customers, and disclose the factors you consider in making available
cryptocurrencies on your platform.  For the Millenium Sapphire token, please provide us
with a discussion of how the token is sold by the issuer, whether that distribution is
registered or conducted pursuant to an exemption, and how you analyze the secondary
market trades on your ATS, including whether they are being conducted pursuant to an
exemption from registration.

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6.In future filings, please discuss your internal policies or procedures for conducting due
diligence for anti-money laundering, know your customer, and/or compliance with the
Office of Foreign Assets Control related requirements.
7.In future filings, please provide greater details regarding your retail customers and
describe your use of digital engagement practices in connection with your technology
platform, including, as examples only, behavioral prompts, differential marketing, game-
like features and other design elements or features designed to engage with retail
investors. Please also address the following, without limitation:
•Specifically describe the analytical and technological tools and methods you use in
connection with such practices and your use of technology to develop and provide
investment education tools.
•Clarify whether any of such practices encourage retail investors to trade more often,
invest in different products or change investment strategies.
•Clarify whether you use any optimization functions (e.g., to increase platform
revenues, data collection and customer engagement).
•To the extent your use of any optimization functions may lead to potential conflicts
between your platform and investors, please add related risk factor disclosure.
•Describe in greater detail your data collection practices or those of your third-party
service providers.
Please include a separate risk factor discussing the current and potential future regulatory
risks associated with your use of digital engagement practices. In that regard, please
consider the SEC's request for information and public comment on matters related to the
use of such practices made on August 27, 2021.
8.Please disclose the material terms of your agreements with third-party custodians,
including:
•what portion of your client's crypto assets and your crypto assets are held in hot
wallets and cold wallets;
•the geographic location where crypto assets are held in cold wallets;
•whether any persons (e.g., auditors, etc.) are responsible for verifying the existence
for the crypto assets held by the third-party custodian(s);
•whether any insurance providers have inspection rights associated with the crypto
assets held in storage;
•a description of the custodian's insurance and the degree to which such policies
provide coverage for the loss of your client's crypto assets and your crypto assets.
9.In future filings, please identify the risks to customers' assets in the event of insolvency or
bankruptcy of any INX entity.  In addition, please disclose whether you have obtained
counsel's opinion regarding the bankruptcy laws of relevant jurisdictions.
10.We note that you accept certain crypto assets as payment fees for services.  In future
filings, please disclose the crypto assets you accept as payment fees, how you determine
the value of such crypto assets and your policies related to monetizing such crypto assets.
Also, in future filings, disclose the crypto assets you currently hold.  Similarly, please tell

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us whether INX.One supports cross-asset trades (i.e., cryptocurrency for crypto asset
securities).  To the extent that you do, please tell us how you determine the value of the
crypto assets used for payment for the crypto asset securities.
11.We note that you intended to establish a platform for the trading of cryptocurrency-based
futures, options and swaps.  To the extent that you still plan to establish this platform,
please disclose, in future filings, the timeline, estimated costs and source of funds for the
development of the platform.
12.In future filings, please include risk factor disclosure regarding whether a significant
amount of the trading volume on your platform currently comes from a small number of
customers, and, if so, please provide quantitative information regarding the percentage of
trading volume that each such customer represents.
13.We note that you had plans to continue the development of your investment tools to add
additional features and improvements to your pre-trade and post-trade services.  In your
future filings, please disclose any new features or improvements to such services and
discuss your plans to develop these tools, including a timeline, estimate of costs and
sources of funds to develop and implement such tools.
14.In future filings, please provide disclosure of any significant crypto asset market
developments material to understanding or assessing your business, financial condition
and results of operations, or INX Token price since your last reporting period, including
any material impact from the price volatility of crypto assets.
15.In future filings, to the extent material, discuss how the bankruptcies of crypto asset
companies and other recent crypto market events as well as the downstream effects of
these events have impacted or may impact your business, financial condition, customers,
and counterparties, either directly or indirectly.  Clarify whether you have material assets
that may not be recovered due to the bankruptcies or may otherwise be lost or
misappropriated.
16.If material to an understanding of your business, in future filings, describe any direct or
indirect exposures to other counterparties, customers, custodians, or other participants in
crypto asset markets known to:
•Have filed for bankruptcy, been decreed insolvent or bankrupt, made any assignment
for the benefit of creditors, or have had a receiver appointed for them.
•Have experienced excessive redemptions or suspended redemptions or withdrawals
of crypto assets.
•Have the crypto assets of their customers unaccounted for.
•Have experienced material corporate compliance failures.
17.If material to an understanding of your business, in future filings, discuss any steps you
take to safeguard your customers’ crypto assets and describe any policies and procedures
that are in place to prevent self-dealing and other potential conflicts of interest.  Describe
any policies and procedures you have regarding the commingling of assets, including

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customer assets, your assets, and those of affiliates or others.  Identify what material
changes, if any, have been made to your processes in light of the current crypto asset
market disruption.
18.In future filings, please disclose whether you have experienced excessive redemptions or
withdrawals, or have suspended redemptions or withdrawals, of crypto assets and explain
the potential effects on your financial condition and liquidity.
19.We note that you own or have issued crypto assets and/or hold crypto assets on behalf of
third parties.  In future filings, to the extent material, explain whether these crypto assets
serve as collateral for any loan, margin, rehypothecation, or other similar activities to
which you or your affiliates are a party.  If so, identify and quantify the crypto assets used
in these financing arrangements and disclose the nature of your relationship for loans with
parties other than third-parties.  State whether there are any encumbrances on the
collateral.  Discuss whether the current crypto asset market disruption has affected the
value of the underlying collateral.
20.In future filings, to the extent material, explain whether, to your knowledge, crypto assets
you have issued serve as collateral for any other person’s or entity’s loan, margin,
rehypothecation or similar activity.  If so, discuss whether the current crypto asset market
disruption has impacted the value of the underlying collateral and explain any material
financing and liquidity risk this raises for your business.
21.In your risk factors section, describe any material risk to you, either direct or indirect, due
to excessive redemptions, withdrawals, or a suspension of redemptions or withdrawals, of
crypto assets.  Identify any material concentrations of risk and quantify any material
exposures.
22.To the extent material, in future filings, please revise your risk factors section to discuss
any reputational harm you may face in light of the recent disruption in the crypto asset
markets.  For example, discuss how market conditions have affected how your business is
perceived by customers, counterparties, and regulators, and whether there is a material
impact on your operations or financial condition.
23.In future filings, please describe any material risks to your business from the possibility of
regulatory developments related to crypto assets and crypto asset markets.  Identify
material pending crypto legislation or regulation and describe any material effects it may
have on your business, financial condition, and results of operations.
24.In future filings, please describe any material risks you face related to the assertion of
jurisdiction by U.S. and foreign regulators and other government entities over crypto
assets and crypto asset markets.

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25.In future filings, please describe, in your risk factors section, any material risks related to
safeguarding your, your affiliates’, or your customers’ crypto assets. Describe any
material risks to your business and financial condition if your policies and procedures
surrounding the safeguarding of crypto assets, conflicts of interest, or comingling of assets
are not effective.
26.In future filings, to the extent material, please describe any gaps your board or
management have identified with respect to risk management processes and policies in
light of current crypto asset market conditions as well as any changes they have made to
address those gaps.
27.In future filings, please describe any material financing, liquidity, or other risks you face
related to the impact that the current crypto asset market disruption has had, directly or
indirectly, on the value of the crypto assets you use as collateral or the value of your
crypto assets used by others as collateral.
28.In future filings, to the extent material, describe any of the following risks due to
disruptions in the crypto asset markets:
•Risk from depreciation in The INX Digital Company, Inc. shares or INX Tokens.
•Risk of loss of customer demand for your products and services.
•Financing risk, including equity and debt financing.
•Risk of increased losses or impairments in your investments or other assets.
•Risks of legal proceedings and government in