Resolution no. 23011

Prohibition, pursuant to article 99, paragraph 1, letter c) of Legislative Decree no. 58/1998, of the public offering concerning investments of a financial nature made by Digital Trust CSP Fzco also via the website www.doublefinance.io

LA COMMISSIONE NAZIONALE PER LE SOCIETÀ E LA BORSA

HAVING REGARD to Law no. 216 of 7 June 1974, as subsequently amended and supplemented;

HAVING REGARD to Legislative Decree no. 58 of 24 February 1998 ("Consolidated Law on Finance"), as subsequently amended and supplemented;

HAVING ESTABLISHED that Consob’s supervisory activity ascertained the presence of the website www.doublefinance.io, available in Italian and attributable, according to what is reported therein, to the company Digital Trust CSP Fzco based in the United Arab Emirates, which proposed the possibility for the user to purchase non-fungible tokens (NFTs) from this company by receiving, "as consideration for having left the NFT in custody", a "bonus"... recognised and accredited weekly" to a predetermined extent, until the value of the NFT possessed is reached. Upon reaching this value, then, on the website it was stated that "the holder may, at his/her choice, keep the NFT and continue to receive the bonuses mentioned above until the new and additional achievement of its purchase value or return the NFT to Digital Trust CSP receiving in exchange, in this case, the consideration for its original purchase value";

HAVING ESTABLISHED, in particular that the investor, once bonuses have been accumulated for a value equal to the purchase amount of the NFT, has the possibility - at his/her choice - to sell the NFT to Digital Trust that buys it back at the initial price (in addition to the bonuses in the meantime paid to the investor) or, alternatively, to keep the NFT (with the bonuses received until then) and restart the aforementioned remuneration mechanism, being able, also in this case, to resell the token at the end of the further bonus "cycle" to Digital Trust;

HAVING ESTABLISHED that, together with the investment opportunity described above, there is the possibility of receiving additional income related to the affiliations created. In particular, the user is invited to promote the sale of NFTs by receiving remuneration for the activities carried out, thereby also increasing his/her "grade" and making his/her "way to the top as General Manager";

HAVING ESTABLISHED that the structure of the transaction was presented as an investment opportunity, because the initiative advertised by the aforementioned company offers potential customers the opportunity of using capital to purchase NFTs, in order to receive a return that is proportional to the amount deposited;

HAVING REGARD TO the fact that, according to the definition provided under article 1, paragraph 1, letter t) of the Consolidated Law on Finance, a "Public offering of financial products" must be understood to mean "any communication made to people, in any form and by any means, that presents sufficient information on the offer conditions and the financial products offered as to render an investor capable of deciding to buy or subscribe the financial products including the placement through licensed parties";

WHEREAS the constituent elements of the public offer relevant for the purposes of the above provision can be summarised as follows:

a) the fact that the activity involves "financial products", a category that includes - pursuant to Art. 1, paragraph 1, letter u), of the Consolidated Law on Finance - both the typified characteristics of "financial instruments" and "every other form of investment of a financial nature";

b) the existence of communication intended to persuade investors to purchase or underwrite these financial products and, consequently, including at the very least a description of their main characteristics;

c) the fact that the communication in question is directed towards Italian residents;

WHEREAS the notion of an "investment of a financial nature" implies the presence of three elements at the same time: (i) an investment of capital; (ii) a promise/expectation of a return of a financial nature; (iii) the assumption of a risk directly connected and related to the investment of capital;

WHEREAS the structure of the transaction in question requires (i) a participant to use their own capital (ii) for the purpose of obtaining a predefined return, expressed as a percentage and calculated on the capital contributed by the investor in which (iii) a potential financial risk is inherent;

HAVING ESTABLISHED that the aforementioned return is allegedly paid for the use of the investor’s capital and would be related to the amount paid;

WHEREAS the legal reason for the negotiating proposal may be considered to be the production of a financial return as consideration for the use of capital transferred by the recipients of this return, who, therefore, transfer their own money with the expectation of a profit, namely, the increase in the cash invested;

CONSIDERING, therefore, that, with regard to the existence of the requirement referred to under letter a), namely, that the offer in question may be classified as a "financial product", the investment offered by the aforementioned website, based on the above, qualifies as an "investment of a financial nature";

HAVING ESTABLISHED that the initiative in question is promoted in standardised and uniform terms, through a presentation that contains a representation of the features of the investment that is such as to place investors in a position to decide whether or not to participate in the actual initiative, but without the possibility for an individual investor to intervene in drawing up the contractual agreement;

CONSIDERING, therefore, that the requirement set out in letter b) is also met;

HAVING ESTABLISHED that the offer made through the website www.doublefinance.io was also directed at Italian investors, insofar as the website was also available in Italian and the documents on the terms of operation and general conditions of sale of the NFTs published on the website were also drawn up in Italian, in which constant reference is made to Italian legislation (in particular, to the provisions of Legislative Decree no. 206/2005 on consumer protection) and to Italian jurisdiction;

HAVING ESTABLISHED that the offer was also made through the channel www.youtube.com/@doublefinance where there were videos in Italian that promote the initiative, as well as the "DoubleFinance" App through which it was, among other things, possible to purchase the tokens;

HAVING ESTABLISHED that a sales scheme was also promoted through the aforementioned website as well as the above-mentioned YouTube channel and App, which offers a user the possibility of earning additional money by recruiting further members of the initiative and that this scheme is suitable to also disseminate the offer of financial products among Italian investors;

CONSIDERING, therefore, that the requirement set out in letter c) is met, since the offering in question is aimed at the public resident in Italy;

CONSIDERING, therefore, that the activity carried out by Digital Trust CSP Fzco to promote investments of a financial nature has the characteristics of a public offering of financial products as defined above;

HAVING REGARD TO article 94-bis, paragraph 1 of the Consolidated Law on Finance, pursuant to which "Anyone intending to make an offer to the public of financial products other than securities and units or shares of open-ended UCITS must publish a prospectus in advance. To this end, an application must be submitted to Consob for approval, with the draft attached. The prospectus cannot be published until it has been approved by Consob";

HAVING ESTABLISHED that, in relation to the activity described, neither prior notification nor the information prospectus intended for publication were sent to Consob;

HAVING ALSO ESTABLISHED that, based on current evidence, the offering in question does not fall into any of the exemptions - contemplated by the combined provisions of articles 100 of the Consolidated Law on Finance and 34-ter of Consob Regulation no. 11971/1999 - from enforcement of the rules on "solicitation of public savings";

HAVING REGARD to Resolution no. 22900 of 22 November 2023, whereby, pursuant to article 99, paragraph 1, letter b), of the Consolidated Law on Finance, Consob implemented the precautionary suspension measure, for a period of ninety days, of the offer to citizens residing in Italy involving an investment of a financial nature implemented by Digital Trust CSP Fzco also through the website www.doublefinance.io;

WHEREAS the defensive observations and arguments transmitted by the aforementioned Company with regard to the aforementioned resolution are not suitable to favour a different characterisation of the reported facts since the NFT, by express provision present in the "General Conditions of Sale", attributes to the buyer a right to receive a periodic remuneration consisting of bonuses paid weekly, which are suitable to be qualified as financial yields. In addition, as reported by the company with regard to the interruption of the NFT offer activity, it is noted that the document with the conditions of sale of the tokens continues to be present within an online application for mobile devices. In particular, in support of the defensive observations made, the Company has, inter alia, transmitted the updated version of the "DoubleFinance" App, on which the "General Conditions of Sale ... of NFT through the App ... owned and managed by DIGITAL TRUST CSP Fzco" continue to be published;

WHEREAS, therefore, in the light of the investigation outlined above and in the absence of any evidence to suggest a situation other than the case outlined in the aforementioned suspension measure, the circumstances de facto and de jure established in said precautionary suspension measure of the aforementioned Resolution are considered to have been ascertained;

CONSIDERING, therefore, that it has been ascertained that - according to the methods described above and noted at the time of adoption of the said precautionary suspension measure - an offering to the public has been made of financial products, sub-category "investments of a financial nature" in breach of the above law;

HAVING REGARD to Art. 99, paragraph 1, letter c) of the Consolidated Law on Finance, pursuant to which Consob: "may: ... c) prohibit the public offering if a violation is confirmed of the provisions of this Chapter or of the related implementation measures or if there are well-founded suspicions that such provisions or measures might be breached ... ";

RESOLVES:

The activity of offering to the public residing in Italy, including via the website www.doublefinance.ioof Digital Trust CSP Fzco, is prohibited.

This Resolution shall be brought to the attention of the concerned parties and published in the Consob Bulletin.

This measure may be appealed before the Regional Administrative Court of Lazio within 60 days of the date of service.

20 February 2024

THE CHAIRMAN
Paolo Savona