SecProbe.io

United States securities and exchange commission logo
April 13, 2023
Shy Datika
Chief Executive Officer
INX Ltd
Unit 1.02, 1st Floor
6 Bayside Road
Gibraltar, GX11 1AA
Re:INX Ltd
Form 6-K
Response Dated February 21, 2023
File No. 000-56429
Dear Shy Datika:
            We have reviewed your February 21, 2023 response to our comment letter 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.
            After reviewing your response to these comments, we may have additional
comments.  Unless we note otherwise, our references to prior comments are to comments in our
December 21, 2022 letter.
Current Report on Form 6-K filed November 15, 2022
General
1.We note your response to comment 1.  Please augment your disclosure in this area
by providing to us and include in future filings a table of all of the crypto assets and
security tokens you offer services in on INX.One, or elsewhere in your corporate
structure.  Also note in this disclosure, the services you offer for each crypto asset or
security token, as well as each jurisdiction where such services are offered.
2.Refer to your response to comment 3.  Please revise the risk factor in your response
letter to remove the statements that the legal test for determining whether any given crypto
assets may "evolve over time" and that the SEC's views in this area have "evolved over

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time" and continue to evolve.  Please remove these statements as the legal tests are well
established by U.S. Supreme Court case law and staff have issued reports, orders, and
statements that provide guidance on when a crypto asset may be a security for purposes of
the U.S. federal securities laws.
3.Refer to your response to comment 8.  In future filings, please disclose the material terms
of your agreement with BitGo for acting as the custodian of your client's crypto assets and
your own crypto assets, including a description of BitGo's insurance and the degree to
which BitGo's insurance provides coverage for the loss of your client's crypto assets and
your crypto assets.  In addition, please add risk factor disclosure regarding the risks of
holding all of your client's crypto assets and your crypto assets in hot wallets.
4.Refer to your response to comment 23. In future filings, please expand the disclosure in
the risk factors to identify specific pending material crypto asset legislation or regulation
in the jurisdictions in which you offer your services and products.
5.Refer to your response to comment 25.  In future filings, please identify the partnering
banks that hold your customers' funds.
6.Refer to your response to comment 26.  In future filings, please provide quantitative
information regarding the price volatility of crypto assets.
7.Refer to your response to comment 29.  Please revise the disclosure in future filings to
provide risk factor disclosure that your INX Digital trading platform may be operating as
an unregistered exchange, unregistered broker-dealer or unregistered clearing agency in
the United States, and discuss the potential consequences associated with those risks.  In
this regard, we note your response that INXD is licensed to operate as a money transmitter
in 43 U.S. states plus Washington D.C. and Puerto Rico and that INXS is registered as a
broker-dealer in United States.

Exhibit 99.1: Unaudited Consolidated Interim Financial Statements for the period ended
September 30, 2022
Notes to Condensed Consolidated Interim Financial Statements
Note 2: Significant Accounting Policies
h. Digital Assets, page F-16
8.We acknowledge your response to the second bullet to prior comment 32.  Please
represent to us that in your upcoming 2022 Form 20-F you will revise your disclosure to
clarify that you no longer carry digital asset as indefinite-lived intangible assets with the
advent of your trading platform.  Otherwise tell us why this disclosure is not meaningful
to an investor's understanding to your current operations.
9.We acknowledge the response to the fourth bullet of prior comment 32 and your statement
that the principal market or most advantageous market for your digital assets held is
frequently not known or determinable and your reference to the provision in IFRS 13.17

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that an entity need not undertake an exhaustive search of all possible markets to identify
the principal or most advantageous market.  Please address the following and reference
the authoritative literature you rely upon to support your position:
•Tell us how an aggregated price from multiple exchanges and platforms on
coinmarketcap.com can represent the price from a single market contemplated in
IFRS 13.16.
•Tell us how you considered the second sentence in IFRS 13.17 that the market in
which you normally transact for each digital asset is presumed to be your principal or
most advantageous market.
•Tell us whether you identify a principal or most advantageous market for each digital
asset you hold and separately determine that the difference between the prices in
these markets and on coinmarketcap.com at each reporting period are immaterial.  To
the extent that you do not make this assessment each reporting period and rely on
your belief that any difference would be immaterial, tell us how you do not have a
significant deficiency or material weakness in internal controls over financial
reporting given the requirement to identify a single principal or most advantageous
market for each digital asset held.
i. Revenue recognition, page F-17
10.We acknowledge your response to prior comment 33. Please provide us with the
following additional information as it relates to Sales of Digital Assets by Customers.
•Explain the differences between a market, limit or stop order trade type.  Provide us
with separate, step by step examples, of each type of sale transaction including a
description of how the sold crypto moves from one customer wallet to another.
•For trade types that are not executed immediately, explain why and tell us when
customer accounts are updated to reflect sales of crypto.
•Provide us a complete accounting analysis with citations to the authoritative literature
that supports your determination that the company does not control the
cryptocurrency being provided before it is transferred to the buyer. Refer to
paragraph 33 of IFRS 15.
•In Section 3.4 of the INX Digital User Agreement, you indicate that “INX Digital
may use shared Digital Currency wallets, controlled by INX Digital or an INX
Custodial Partner. INX Digital may commingle users’ Digital Currencies.”oExplain how frequently you use shared Digital Currency wallets and which
trade types they are used for.
oInclude how you considered the commingling of users' Digital Currencies
in shared Digital Currency wallets, controlled by  INX Digital or an INX
Custodial Partner, in the accounting analysis requested above.
•In Section 4.2 of the INX Digital User Agreement you indicate for sales transactions,
“to secure the performance of your obligations under this Agreement, you may be
required to grant to INX Digital or one of the INX Custodial Partners a lien on and
security interest in and to the balances in your INX Digital Account.”oProvide us an example of a trade with INX Digital or one of the INX Custodial

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Partners that would require a customer to grant a lien on its INX Digital
Account and the purpose of such lien. We note the statement in your response
that “the customer must have sufficient buying power (sufficient USD or
relevant digital assets balance in the account) for the order to be executed.” Tell
us whether the company provides any liquidity support to its customers for
digital asset sales transactions.
oInclude how you considered any company provided liquidity support in the
accounting analysis requested above.
Exhibit 99.2: Management's Discussion and Analysis of Financial Condition and Results of
Operations
Operational Highlights, page 15
11.We acknowledge your response to prior comment 31.  Please confirm that you will
provide the disclosures referred to in your response in your upcoming Form 20-F.
Otherwise explain to us how these disclosures would not be meaningful to an investor's
understanding of your results of operations over time notwithstanding your indication that
your revenues have not been significant in the past.
            You may contact Mark Brunhofer at (202) 551-3638 or Sharon Blume at (202) 551-
3474 if you have questions regarding comments on the financial statements and related
matters.  Please contact Eric Envall at (202) 551-3234 or Sonia Bednarowski at (202) 551-
3666 with any other questions.
Sincerely,
Division of Corporation Finance
Office of Crypto Assets
cc:       Mark Selinger