Suspension, pursuant to art. 99, para 1, letter b) of Legislative Decree no. 58/1998, of the public offer to residents in Italy involving investments of a financial nature, including via the www.avacrypto.com website

LA COMMISSIONE NAZIONALE PER LE SOCIETÀ E LA BORSA
[THE NATIONAL COMMISSION FOR COMPANIES AND THE STOCK EXCHANGE]

HAVING REGARD TO Law no. 216 of June 7, 1974, and subsequent amendments and additions;

HAVING REGARD TO Legislative Decree no. 58 of February 24, 1998 ('Consolidated Law on Finance') and subsequent amendments and additions;

HAVING ESTABLISHED that, as a result of the supervisory activities performed by CONSOB, evidence was gathered surrounding the performance, including via thewww.avacrypto.com website, of a scheme involving subscription to the 'AvaCrypto Investment Plan', also offered to persons resident in Italy.

HAVING ESTABLISHED in particular that, from checks on the www.avacrypto.com website, it emerged that:

i. the www.avacrypto.com,website, registered by a user whose identity is not known, it is also available in Italian;

ii. potential investors can access to the various services called 'Business Account', 'Real Quote', 'Mineral Account', 'Storage Account', 'Account in Management' and 'Fixed Rate Booklet';

iii. the service called 'Fixed Rate Booklet' offers high guaranteed monthly returns. In particular, this service is presented as the 'perfect solution to begin on the market without spending too much time or having questions or doubts' in addition to it being specified that 'the rate of return and the duration of the booklet are contractual and immutable'. According to that indicated on the website, the investment in question includes the following elements: 'legal contract, flexible terms, fast maturities, total coverage, guaranteed returns, competitive interest rates';

iv. the 'Privacy' section of the website mentions Crypto Consultancy Ltd and the 'Contact Us' indicates the address '15 York Place, Leeds, Royaume Uni';

HAVING ESTABLISHED that individuals operating on behalf of 'AvaCrypto' have contacted Italian investors to offer them a contract called 'AvaCrypto Investment Plan';

HAVING ESTABLISHED that the preamble of the aforementioned contract states that 'AvaCrypto and the corresponding website www.avacrypto.com are the property of Fintech Limited, an English company with registered address in 20-22 Wenlock Road, London, NI 7OJ, United Kingdom';

HAVING ESTABLISHED that the terms of the contract expressly include the undertaking of the company to pay a pre-set financial return on pre-established dates and to repay the capital paid by the investor, insofar as article 1 of the contract states: 'AvaCrypto undertakes in this service to guarantee the signatory a minimum monthly profit of 3%, 5%, and 9%, based on the duration of the contract which may be three months (3), six months (6) or one year (1). Furthermore, AvaCrypto guarantees 100% of the capital invested by the Signatory for the full duration of the contract':

HAVING ALSO ESTABLISHED that, despite the requests from CONSOB, no useful information relating to the scheme was provided;

HAVING ESTABLISHED that the transaction structure is presented as an investment opportunity;

HAVING REGARD to the fact that, according to the definition under art. 1, par. 1, Letter t) of Leg. Decree no. 58/1998, 'offer of financial products to the public' must be understood to mean 'any communication made to people, in any form and by any means, that presents sufficient information about the conditions of the offer and the financial products offered as to render an investor capable of deciding to buy or underwrite such financial products, including placement by means of licensed bodies';

HAVING CONSIDERED that the elements constituting the offer to the public can be summed up as follows:

a) the fact that the activity concerns 'financial products', a category that includes- pursuant to art. 1, paragraph 1, letter u) of Legislative Decree no. 58/1998 - both the 'standardised' figures of 'financial instruments' and 'any other form of investment of a financial nature';

b) performance of communication activities aimed at having one acquire or subscribe to the 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 at the Italian public;

HAVING CONSIDERED that the notion of 'investment of a financial nature' implies the coexistence of the following three elements: (i) employment of capital; (ii) an expected return of a financial nature; (iii) the assumption of a risk which is directly connected and related to the employment of capital;

HAVING CONSIDERED that the transaction structure in question envisages a) that subscribers use their own capital for the purchase of shares b) that, pursuant to the aforesaid subscription, a return is promised c) the consequent assumption of risk related to the use of the allocated capital;

HAVING ESTABLISHED, therefore, that the aforementioned return would be paid against the use of the investor's capital;

HAVING CONSIDERED, therefore, that the reason of the contract in question is attributable to the production of a financial return as consideration for the use of capital entrusted by the payee themselves, who therefore confers their own money with a profit expectancy, namely the increase of the investment liquidity;

HAVING CONSIDERED, therefore, that - with regard to the existence of the requirement referred to in letter a), i.e. the subject of the offer can be classified as a 'financial instrument' - the trading proposals offered, including via the www.avacrypto.com website, based on what has been illustrated, do appear to have the characteristics of 'an investment of financial nature';

HAVING ESTABLISHED that the contract details outlined above provide a uniform representation of the characteristics of the investment proposals that render investors capable of assessing whether or not to subscribe to the scheme;

HAVING FOUND therefore, that the requirement set out in letter b) is met;

HAVING ESTABLISHED, furthermore, that there are unequivocal indications that the offer concerned is addressed to the public resident in Italy. In fact, it is noted that Italian investors are contacted by telephone and persuaded to sign the contract called 'AvaCrypto Investment Plan' with consequent registration on the www.avacrypto.com website and access to the personal area of the same website, which is still active and available in Italian;

HAVING FOUND, therefore, that the requirement set out in letter c) is met, since the offering in question is made to the Italian public;

HAVING FOUND therefore, that the activity of the individuals operating on behalf of 'AvaCrypto' has the characteristics of the public offer of financial instruments as defined above;

HAVING ESTABLISHED that the offer in question, on the basis of current evidence, does not qualify for any of the possible exemptions - contemplated by the combined provisions of art. 100 of Legislative Decree no. 58/98 and art. 34-ter of CONSOB Regulation no. 11971/98 - from application of the regulations on the 'solicitation of public savings';

HAVING CONSIDERED Art. 94, para. 1, of Legislative Decree no. 58/1998, pursuant to which 'Anyone intending to make an offer to the public must publish a prospectus in advance. To that end, for offers concerning EU financial instruments for which Italy is the founder Member State and for offers of financial products other than EU financial instruments, they shall provide prior notification to CONSOB enclosing the prospectus intended for publication. The prospectus may not be published until it is approved by CONSOB';

HAVING ESTABLISHED that, in relation to the offer in question, neither prior notification nor the information prospectus intended for publication were sent to CONSOB;

HAVING CONSIDERED, therefore, that there are the grounds for suspecting the promotion of a public offer of financial products in infringement of the relevant laws and regulations;

HAVING ESTABLISHED that the public offering of these financial products is currently still ongoing;

HAVING REGARD TO art. 99, par. 1, letter b) of Leg. Decree no. 58/98, according to which CONSOB 'can, by way of a precaution, suspend for a period of up to ninety days any offer of products other than those referred to in Letter a) [i.e. European financial instruments] if there are grounds for suspecting the infringement of the provisions of this paragraph [that regulates the public offer of financial products] or of the relative implementing regulations';

HAVING CONSIDERED that, given the existence of the above-mentioned conditions, there is the urgent need to apply the measure identified above;

HEREBY RESOLVES:

As a precautionary measure, to suspend for a period of 90 days, the offer of financial instruments to the public resident in Italy for investments of a financial nature, also promoted through the www.avacrypto.com website.

This Resolution shall be brought to the attention of those concerned and published in CONSOB's Bulletin.

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

10 October 2018

THE DEPUTY CHAIRMAN
Anna Genovese