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Bitcoin Shop To Trade Publicly Over The Counter

Publication Date: 
February 06, 2014
Source: 
The Wall Street Journal
Author: 
Joe Light

Professor Joseph Grundfest weighs in on the "reverse merger" used by Bitcoin Shop Inc. to go public for The Wall Street Journal.

Bitcoin Shop Inc., TUCND +27.49% an online retailer, became the first U.S. publicly traded company with the word "bitcoin" in its name, a hallmark for a virtual currency whose rapid growth has spawned intense regulatory scrutiny.

Bitcoin Shop, which sells everything from soap to cellphones and takes bitcoin for payment, executed what is known as a reverse merger, according to filings with the Securities and Exchange Commission on Wednesday.

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In past years, reverse mergers have been popular among China-based companies looking to be traded in the U.S., said Joseph Grundfest, a professor at Stanford Law School who has researched the practice.

"It typically arises when companies calculate that it is the cheapest and fastest way to the public market," he said.