# SECURITIZE MARKETS, LLC X-17A-5 (2023-03-31) — Broker-dealer annual report

- Company: SECURITIZE MARKETS, LLC
- Form: X-17A-5
- Filed: 2023-03-31
- Period: 2022-12-31
- Accession: 0001668629-23-000003
- CIK: 1668629
- File #: 8-69743
- Type: Broker-dealer
- Material weakness: No
- Auditor: Spicer Jeffries
- Auditor location: Denver, CO
- Contact: Janice Parise
- Phone: 212 751-4422
- Email: jparise@dfppartners.com
- Website: dfppartners.com
- Signed by: Jay Proffitt (Chief Executive Officer)

Original filing: https://www.sec.gov/Archives/edgar/data/1668629/000166862923000003/securitizesfc2022.pdf

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|                                                                                                       | UNITED STATES                                                                                                               |                                        |                                                                                                                       |                                            |
|-------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|----------------------------------------|-----------------------------------------------------------------------------------------------------------------------|--------------------------------------------|
|                                                                                                       | SECURITIES AND EXCHANGE COMMISSION                                                                                          |                                        | OMB APPROVAL<br>OMB Number: 3235-0123<br>Expires: Oct. 31, 2023<br>Estimated average burden<br>hours per response: 12 |                                            |
|                                                                                                       | Washington, D.C. 20549                                                                                                      |                                        |                                                                                                                       |                                            |
|                                                                                                       | ANNUAL REPORTS                                                                                                              |                                        |                                                                                                                       |                                            |
|                                                                                                       | FORM X-17A-5                                                                                                                |                                        |                                                                                                                       | SEC FILE NUMBER                            |
|                                                                                                       |                                                                                                                             |                                        |                                                                                                                       |                                            |
|                                                                                                       | PART III                                                                                                                    |                                        |                                                                                                                       | 8-69743                                    |
|                                                                                                       | FACING PAGE<br>Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act<br>of 1934 |                                        |                                                                                                                       |                                            |
|                                                                                                       | REPORT FOR THE PERIOD BEGINNING 01/01/2022 AND ENDING<br>MM/DD/YY                                                           | 12/31/2022<br>MM/DD/YY                 |                                                                                                                       |                                            |
|                                                                                                       | A. REGISTRANT IDENTIFICATION                                                                                                |                                        |                                                                                                                       |                                            |
| NAME OF FIRM: Securitize Markets, LLC                                                                 |                                                                                                                             |                                        |                                                                                                                       |                                            |
| &Broker-dealer<br>□ Check here if respondent is also an OTC derivatives dealer<br>2513 Rio Mesa Drive | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)                                                           | □Major security-based swap participant |                                                                                                                       |                                            |
|                                                                                                       | (No. and Street)                                                                                                            |                                        |                                                                                                                       |                                            |
| Austin                                                                                                | TX                                                                                                                          |                                        |                                                                                                                       | 78732                                      |
| (City)                                                                                                | (State)                                                                                                                     |                                        | (Zip Code)                                                                                                            |                                            |
| PERSON TO CONTACT WITH REGARD TO THIS FILING                                                          |                                                                                                                             |                                        |                                                                                                                       |                                            |
| Janice Parise                                                                                         | 212-751-4422                                                                                                                |                                        | jparise@dfppartners.com                                                                                               |                                            |
| (Name)                                                                                                | (Area Code - Telephone Number)                                                                                              |                                        | (Email Address)                                                                                                       |                                            |
|                                                                                                       | B. Accountant Identification                                                                                                |                                        |                                                                                                                       |                                            |
| Spicer Jeffries LLP                                                                                   | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*                                                   |                                        |                                                                                                                       |                                            |
|                                                                                                       | (Name - if individual, state last, first, middle name)                                                                      |                                        |                                                                                                                       |                                            |
| 4601 DTC Boulevard                                                                                    | Denver                                                                                                                      | CO                                     |                                                                                                                       | 80237                                      |
| (Address)                                                                                             | (City)                                                                                                                      | (State)                                |                                                                                                                       | (Zip Code)                                 |
| 10/20/2003                                                                                            |                                                                                                                             |                                        |                                                                                                                       | 349                                        |
| (Date of Registration with PCAOB)(if applicable)                                                      |                                                                                                                             |                                        |                                                                                                                       | (PCAOB Registration Number, if applicable) |
|                                                                                                       | FOR OFFICIAL USE ONLY                                                                                                       |                                        |                                                                                                                       |                                            |
|                                                                                                       | * Claims for exemption from the requirements be rovered by the reports of an independent minic accountant must he           |                                        |                                                                                                                       |                                            |

n from the requirement that the annual reports be covered by the reports of supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(1)(ii), if applicable. Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

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### OATH OR AFFIRMATION

I, Jay Proffitt, swear (or affirm) that, to the best of my knowledge and belief, the financial report personer of Broker Dealer, as of December 31, 2022, is true and correct. I further the company nor any partner, officer, director, or equivalent person, as the case may proprietary interest in any account classified solely as that of a customer.

MARYROSE MERCADO NOTARY PUBLIC, STATE OF NEW YORK Registration No. 01ME6423025 Qualified in Queens County Commission Expires October 4, 20 2 5

| Signature: | DocuSigned by:          |  |
|------------|-------------------------|--|
|            | Iay Proffitt            |  |
| Title:     | TANK TATAL TO THE PART  |  |
|            | Chief Executive Officer |  |

Notary Public

### This filing\*\* contains (check all applicable boxes):

- 区 (a) Statement of financial condition.
- 区 (b) Notes to consolidated statement of financial condition.
- | (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in § 210.1-02 of Regulation S-X).
- 
- □ (e) Statement of changes in stockholders' or partners' or sole proprietor's equity.
- □ (f) Statement of changes in liabilities subordinated to claims of creditors.
- [ (g) Notes to consolidated financial statements.
- □ (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable.
- [ (i) Computation of tangible net worth under 17 CFR 240.18a-2.
- | {j} Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3.
- [] {k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable.
- O (I) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3.
- | (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3.
- | (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable.
- □ (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-2, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist.
- □ (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition.
- 🇿 (q) Oath or affirmation in accordance with 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable.
- □ (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- | (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- മ (t) Independent public accountant's report based on an examination of the statement of financial condition.
- □ (u) Independent public accountant's report based on an examination of the financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable.
- □ (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- | (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- □ (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.17a-12, as applicable.
- D (y) Report describing any material inadequacies found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k).
- □ (z) Other:

\*\* To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d)(2), as applicable.

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# SECURITIZE MARKETS, LLC

Statements of Financial Condition Pursuant to Rule 17a-5 under the Securities Exchange Act of 1934 December 31, 2022

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# SECURITIZE MARKETS, LLC Index December 31, 2022

|                                                         | Page(s) |
|---------------------------------------------------------|---------|
| Report of Independent Registered Public Accounting Firm |         |
| Financial Statements                                    |         |
| Statement of Financial Condition                        |         |
| Notes to Financial Statements                           |         |

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# SECURITIZE MARKETS, LLC Notes to the Statement of Financial Condition As of December 31. 2022

#### 1. Organization

Securitize Markets, LLC (the "Company") was incorporated in the state of Delaware on December 10, 2015 as Orchard Marketplace, LLC which name was subsequently changed to Orchard Platform Markets, LLC and then Distributed Technology Markets, LLC. On November 16, 2020 the Company and a sister company, Velocity Platform, LLC were purchased by Securitize, Inc. Pursuant to the transaction, the Company became a wholly owned single member LLC subsidiary of Securitize, Inc. (the "Parent") and changed its name to Securitize Markets, LLC.

On September 28, 2016, the Company became registered with the Securities and Exchange Commission ("SEC") as a broker-dealer and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA"). The Company has been approved by FINRA to engage in private placement of securities including those in digital form, broker whole loans and loan portfolios, refer prospective customers to unaffiliated broker-dealers in return for a finder's fee or percentage of commission generated, and operate an alternative trading system ("ATS") for secondary transactions in securities, including those in digital form.

### 2. Summary of Significant Accounting Policies

### Basis of Presentation

These financial statements were prepared in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

### Going Concern Consideration

To date the Company has experienced operating losses and negative cash flows from operations. Whether and when the Company can attain profitability and positive cash flows from operations is uncertain. Support has been provided by the Parent, who has stated to the Company that this support will continue for the foreseeable future.

Having considered the above and having made due inquiries, management of the Company continues using the going concern basis in preparing the financial statements which assumes that the Company will continue in operation for the foreseeable future

### Revenue Recognition

### Revenue from Contracts with Customers

Revenue from contracts with customers includes fees earned for placement services pursuant to the terms of individual Placements with issuers. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgment is required to determine whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract, whether revenue should be presented gross or net of certain costs; and whether constraints on variable consideration should be applied due to uncertain future events.

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{8}------------------------------------------------

## SECURITIZE MARKETS, LLC Notes to the Statement of Financial Condition As of December 31. 2022

### Cash

All cash deposits are held by one financial institution and therefore are subject to the credit risk at that financial institution. The Company has not experienced any losses in such accounts and does not believe there to be any significant credit risk with respect to these deposits.

### Income Taxes

The Company is a single member limited liability company, and is treated as a disregarded entity for federal income tax reporting purposes. The Internal Revenue Code ("IRC") provides that any income or loss is passed through to the ultimate beneficial individual member for federal, state and certain local income taxes. Accordingly, the Company has not provided for income taxes. Management confirms that no election was made as of the financial statements for the Company to be taxed as a corporation. The Parent is taxed as a partnership and files a consolidated tax return.

The Company is a single member limited liability company and accordingly, no provision has been made in the accompanying financial statement for any federal, state, or city income taxes. The Company's sole member is subject to New York City Unincorporated Business Tax ("UBT"), but the Company is a disregarded entity for tax purposes. All revenue and expenses retain their character and pass directly to the Parent's income tax returns. Based on an analysis of the operations of the Broker Dealer there was no UBT tax provision required.

At December 31, 2022, management has determined that the Company had no uncertain tax positions that would require financial statement recognition. This determination will always be subject to ongoing reevaluation as facts and circumstances may require. The Company's tax preparers reviewed the Company's tax position and the results from operations and as a result of this review, the Company has determined there were no uncertain tax positions.

#### Transactions with Related Parties 3.

In March 2020, the Company entered into an Expense Sharing Agreement ("ESA") with its Parent whereby the Parent is to provide payroll, office and administrative services to the Company. The ESA shall remain in force until such time as either Party provides notice to the other that such Party wished to terminate the agreement. There is no amount Due to Parent on the accompanying Statement of Financial Condition. The settlement of this balance is at management discretion.

For the year ended December 31, 2022, the Company recorded \$3,220,397 in capital contributions representing forgiveness of the intercompany payable to the Parent. The Company made cash distributions to the Parent of \$61,715.

#### 4. Concentrations

Cash held by financial institutions which exceed the Federal Deposit Insurance Corporation ("FDIC") limits of \$250,000 expose the Company to concentrations of credit risk. Balances throughout the year usually exceed the maximum coverage provided by the FDIC on insured depositor accounts.

{9}------------------------------------------------

# SECURITIZE MARKETS, LLC Notes to the Statement of Financial Condition As of December 31. 2022

#### 5. Net Capital Requirements

The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of a minimum amount of net capital and requires that the ratio of aggregate indebtedness to net capital shall not exceed 15 to 1. Under Rule 15c3-1, the Company is required to maintain a minimum net capital, equal to the greater of \$250,000 or 6 2/3% of aggregate indebtedness. At December 31, 2022, the Company had regulatory net capital of \$1,167,238 which was \$917,238 above the required net capital of \$250,000. The Company's ratio of aggregate indebtedness to regulatory net capital was 0.04 to 1 at December 31, 2022.

### 6. Commitments and Contingencies

As of December 31, 2022, there were no claims or lawsuits brought by or aqainst the Company.

#### Guarantees 7.

FASB ASC 460, Guarantees, requires the Company to disclose information about its obligations under certain guarantee arrangements. FASB ASC 460 defines guarantees as contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in an underlying factor (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or nonoccurrence of a specified event) related to an asset, liability or equity of a guaranteed party. This guidance also defines guarantees as contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity's failure to perform under an agreement as well as indirect quarantees of the indebtedness of others.

The Company has issued no guarantees at December 31, 2022 or during the year then ended.

#### 8. Subsequent Events

In response to the deteriorating financial condition of Silicon Valley Bank (SVB), because of a bank run, and to mitigate risk and exposure for the broker-dealer, on March 9, 2023, the firm took measured action by withdrawing its capital from SVB and moving it to its parent company Securitize, Inc., overnight. The broker-dealer's capital was swiftly returned to Securitize Markets in its new account with Signature Bank on March 10, 2023. Management of the Company evaluated and noted no additional subsequent events or transactions that occurred from January 1, 2023 through the date these financial statements were issued, that would require recognition or disclosure in the financial statements.


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