Resolution no. 21023

Prohibition, pursuant to art. 99, paragraph 1, letter d) of Legislative Decree no 58/1998, of the offering to the Italian public concerning 'Token Ecb I' and 'Token Ecb S', made by Forgues Gestion Sas also through the website www.europeancryptobank.io

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 7 June 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, through the website www.europeancryptobank.io, which can also be viewed in Italian, an activity is carried out which consists in an "Inital Coin Offer" ("ICO") - also addressed to subjects resident in Italy - to purchase "tokens" called "ECB I" and "ECB S";

HAVBING ESTABLISHED that the aforementioned site also contains a document called "white paper", available in Italian, which describes the initiative called "European Crypto Bank" and the ICO in question;

HAVING ESTABLISHED that the said website and the said white paper both allow to attribute the scheme in question to "European Crypto Bank", which would be a “joint venture” between several companies;

HAVING CONSIDERED that, actually the scheme in question seems to be only attributable to Forgues Gestion SAS, a member company of the said “joint venture” with registered address in France, since the other joint venture member companies have been deleted from the companies register and/or are no longer members of the "entrepreneurial project” in question;

HAVING ESTABLISHED that the ICO covers two categories of tokens, referred to as 'ECB tokens': a first type of token - called the "ECB Token I" - allows you to "receive 6% of what you get annually" from European Crypto Bank and is convertible into "ECB S Token" to access the services provided by European Crypto Bank; the latter type of token, among other things, allows you to receive an additional 5% of tokens each year and access the services of tax assistance, financial research and the "asset management service" of European Crypto Bank;

HAVING FOUND that in the above mentioned white paper, available on the aforesaid website, it is stated that European Crypto Bank has set itself the “target : To become a fully regulated Crypto Bank [...] inEurope , by creating a gateway between crypto currencies owners and all traditional assets (Shares, Bonds, Commodities, Real Estate…)”.

HAVING FOUND that in the said white paper it is stated that a “pre-ICO” would take place between February 116, 2018, and May 17, 2018, with which “ECB Token I” and "ECB Token S" would be offered at more favourable financial conditions than those for the "ordinary ICO" (variable discounts of 15/10/5%);

HAVING FOUND that, again in the said white paper, the turnover expected from sales of tokens is between a minimum of 5 million euros and a maximum of 200 million euros, and the price is set at 0.63 euros per token;

HAVING FOUND that both in the website and the white paper generic “wealth and asset management” services and different types of advisory services are promised to those who invest in the tokens, and the intention is stated to create a platform for the online trading and exchange of the aforesaid tokens against conventional assets and/or cryptocurrencies;

HAVING FOUND that the white paper always refers to "financial levers", stating that "European Crypto Bank will provide up to six times the amount actually invested;

HAVING FOUND that the website homepage displays a link named "buy" which redirects registered users in an area where they can purchase tokens;

HAVING FOUND that Forgues Gestion SAS did not provide any response to requests for information and documentation from the Writer;

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 of the public offer relevant for the purposes of this provision can be summarised as follows:

a) the fact that the activity involves a specific or several specific ‘financial products’, a category that includes - pursuant to Art. 1, para. 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 subscribe to these financial products and, consequently, including at the very least a description of their main characteristics;

c) the representation of the offer in uniform and standardised terms and the consequent impossibility for the individual investor to intervene in the formation of the contractual agreement and on the subsequent use of the money paid;

d) the fact that the offer in question is directed towards Italian residents;

HAVING CONSIDERED that the structure of the transaction in question requires (a) subscribers to use their own capital (b) for obtaining a return equal to “6% of the annual ECB turnover", and "5% additional tokens each year”, against a capital contribution from the investor - with a financial leverage equal to "up to X6 times the real amount invested” - in which (c) a potential financial risk is inherent;

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

HAVING CONSIDERED, therefore, that the reason for the trade proposal can be attributed to the production of a financial return consisting of consideration of the use of capital granted by the recipients of this return, who, therefore, invest his/her own money with the expectation of profit;

HAVING CONSIDERED therefore, that, with regard to the existence of the requirement referred to in letter a), i.e., the fact that the content of the offering can be classified as a ‘financial product’, the investment offered by Forgues Gestion SAS, based on the foregoing, appears to qualify as ‘an investment of a financial nature’;

HAVING ESTABLISHED, furthermore, that the www.europeancryptobank.io website displays information describing the characteristics of the investment scheme in such a way as to render the investor capable of deciding whether or not to subscribe to it;

HAVING ESTABLISHED that the aforementioned website promotes the scheme using standardised and uniform terms, with no possibility for the individual investor to play any part in defining the contract;

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

HAVING SEEN, furthermore, that the offering under examination would be addressed to the public resident in Italy. In fact, the said website, although not available in Italian, contains references to Italy and a “white paper” written in Italian and fully intelligible;

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

HAVING CONSIDERED therefore, that the activity set up by Forgues Gesition SAS aimed at promoting the tokens described on the aforementioned website, qualifies as a the public offering of financial products as defined above;

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. 58/1998 and Art. 34-ter of CONSOB Regulation no. 11971/1998 - from enforcement of the rules on ‘solicitation of public savings’;

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 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 cannot be published until it is approved by CONSOB’.

HAVING ESTABLISHED that, in relation to the activity set up by Forgues Gestion SAS, neither prior notification nor the information prospectus intended for publication were sent to CONSOB;

HAVING CONSIDERED CONSOB’s Resolution no. 20929 of 8 May 2019, with which pursuant to Art. 99, para. 1, letter b), of the Consolidated Law on Finance, CONSOB implemented the precautionary suspension measure of the offering of "Token Ecb I" and "Token Ecb S" to the public resident in Italy for a period of ninety working days, carried out by Forgues Gestion SAS also through the website www.europeancryptobank.io;

HAVING CONSIDERED that the company has sent no objections in response to the facts on which the precautionary suspension measure is based;

HAVING CONSIDERED, therefore, that, in the light of the investigation outlined above and 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 in the suspension measure are considered to have been ascertained;

CONSIDERING therefore established the public offering of financial products consisting of financial instruments has been made in violation of the aforementioned legislation;

HAVING REGARD to Art. 99, para. 1, letter d) of the Consolidated Law on Finance, pursuant to which CONSOB may ‘prohibit the public offering if violation of the provisions or regulations referred to under paragraphs a) or b) are confirmed’;

HEREBY RESOLVES:

It is forbidden to offer “Ecb I Tokens" and "Ecb S Tokens" to the public resident in Italy, carried out by Forgues Gestion SAS also through the website www.europeancryptobank.io

This Resolution shall be brought to the attention of those whom it concerns and will be 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.

July 31, 2019

THE CHAIRMAN
Paolo Savona