How crowdpay works
Our platform and APIs work similarly to other payment processor platforms. Once an offering is approved and you're ready to sign up Investors and begin funding escrows, a self-directed IRA or CrowdPay Custodial (non-IRA) sub-account is created on our system for each Investor in an offering, depending on how they want to fund their investment. Each sub-account is funded via ACH, wire or IRA rollover/transfer. Funds are then moved to the escrow account for the specified offering. If the offering meets escrow, funds are released to the Issuer’s business account. If the offering fails to meet escrow, funds are returned to the Investors’ CrowdPay accounts and/or IRAs at GoldStar to either be withdrawn (ACH'd to their checking account) or better yet, reinvested in a different offering. This way, the funds are captured, or "sticky", making an investor more likely to reinvest on your platform. When interest, dividend, royalty payments, etc. are paid by Issuers, funds are automatically sent to each Investor’s CrowdPay account and/or IRA at GoldStar and the same logic applies. Portals have access to all transactional data for each offering and investor throughout each process via API.
Escrow Process Flow
The Issuer signs an Escrow Agreement with GoldStar Trust Company.
Once an issue is approved and placed on GoldStar’s system, funds can begin to be collected from Investors. We do that by opening either a CrowdPay custodial account or a self-directed IRA for each Investor, depending on how they are funding the account.
For CrowdPay accounts, an ACH draft is initiated by GoldStar that pulls the funds directly from a bank account authorized by the Investor.
The funds are then moved from each CrowdPay account (or IRA) to the escrow account - the investment specified on the Portal.
If the issue meets escrow, funds are released to the Issuer’s business account. If the issue fails to meet escrow, funds are returned to the Investors’ CrowdPay accounts and/or IRAs at GoldStar.
When interest, dividend, royalty payments, etc. are paid by Issuers, funds are automatically sent to each Investor’s CrowdPay account and/or IRA at GoldStar.
Uninvested cash balances in CrowdPay accounts and IRAs can either be withdrawn (ACH'd back to Investor's bank account) or reinvested in another offering on the Portal.
The Portal has access to all offering and Investor data throughout each process via API including escrow statements, cash balances, transactions ,etc.