Resolution no. 20751

Prohibition, pursuant to art. 99, para 1, letter d), 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 and subsequent amendments and additions (‘Consolidated Law on Finance’);

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

HAVING ESTABLISHED, in particular, that checks on the website revealed that:

i. the www.avacrypto.com website, registered by a user whose identity is concealed, 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’ was used to offer high guaranteed monthly returns. In particular, this service was 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 the description on the website, the investment in question featured the following elements ‘legal contract, flexible terms, fast deadlines, total coverage, guaranteed performance, competitive interest rates’;

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

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

HAVING ESTABLISHED that the preamble of the aforementioned contract stated 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 included 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 stated: ‘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 (3) months, six (6) months or one (1) year. Furthermore, AvaCrypto guarantees 100% of the capital invested by the Signatory for the full duration of the contract’;

HAVING ESTABLISHED, furthermore, that, despite the requests by CONSOB, no useful information relating to the initiative was provided;

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

HAVING REGARD TO the fact that, according to the definition under art. 1, para. 1, letter t) of Leg. Decree no. 58/1998, an ‘public offer of financial products’ 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 so 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 involves ‘financial products’, a category that includes, pursuant to art. 1, para. 1, letter u) of Leg. Decree no. 58/1998, both the ‘typical’ ‘financial instruments’ and ‘every other form of investment of a financial nature’;

b) the existence of communication intended to persuade investors to purchase or subscribe to 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 at Italian residents;

HAVING CONSIDERED that the notion of ‘investment of a financial nature’ implies the coexistence of the following three elements: (i) investment of capital; (ii) the expectation of a financial return; (iii) the assumption of risk directly connected and related to the investment of capital;

HAVING CONSIDERED that the structure of the transaction encountered requires that (a) the subscribing party uses his own capital to purchase the shares (b) a return is promised on the basis of this purchase (c) with the consequent assumption of risk related to the investment of the capital provided;

HAVING ESTABLISHED, therefore, that the aforementioned return would be paid against the investment 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 recipient of the return himself, who, therefore, provides his own money with an expectation of earning a profit, namely the growth of the cash invested;

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 negotiation proposals offered through the website www.avacrypto.com website, based on that illustrated, have the characteristics of ‘an investment of a financial nature’;

HAVING ESTABLISHED that the contents of the www.avacrypto.com website outlined above provide a uniform representation of the investment proposals characteristics, suitable to rendering investors capable of deciding whether or not to subscribe to the initiative;

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

HAVING ESTABLISHED, furthermore, that there are unequivocal indications that the offer in question was addressed to the public resident in Italy, insofar as that published on the www.avacrypto.com website was also available in Italian;

HAVING FOUND, therefore, that the requirement set out in letter c) is met, given that the offer in question is addressed to Italian residents;

HAVING FOUND, therefore, that the activity implemented via the www.avacrypto.com website has the characteristics of the public offer of financial instruments as defined above;

HAVING REGARD TO 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 this end, for offers concerning EU financial instruments for which Italy is the Member State of origin and for offers of financial products other than EU financial instruments, prior notification must be sent to CONSOB including the prospectus intended for publication. The prospectus may not be published until it is approved by CONSOB’;

HAVING ESTABLISHED that, in relation to the activity implemented via the www.avacrypto.com website, CONSOB received neither prior notification nor the information prospectus intended for publication;

HAVING ESTABLISHED that the offer in question, on the basis of current evidence, does not qualify for any of the 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 enforcement of the rules on ‘solicitation of public savings’;

HAVING REGARD TO Resolution 20617 of October 18, 2018, with which CONSOB, pursuant to art. 99, para. 1 letter b) of Legislative Decree 58/98 adopted measures for a ninety day precautionary suspension of the offer to the Italian public of investments of a financial nature performed via the www.avacrypto.com website;

HAVING CONSIDERED that the company, to which the www.avacrypto.com website can be attributed, has failed to respond to the facts presented as grounds for the suspension measure;

HAVING CONSIDERED therefore, that in the absence of any evidence to suggest a situation other than that outlined in the aforementioned suspension measure, the circumstances de facto and de jure established under this suspension must be considered ascertained;

HAVING FOUND, therefore, that the public offer of investments of a financial nature in infringement of the regulations cited above has been established, according to the methods described above;

HAVING REGARD TO art. 99, para. 1, letter d) of Legislative Decree no. 58/98, on the basis of which CONSOB may ‘prohibit the public offering where there is the ascertained infringement of the provisions or regulations referred to under paragraphs a) or b)’;

HEREBY RESOLVES:

To prohibit the offering of investments of a financial nature to the public resident in Italy 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 from the date of notification.

December 19, 2018

THE ACTING CHAIRMAN
Giuseppe Maria Berruti