Resolution no. 21024

Prohibition, pursuant to art. 99, paragraph 1, letter d) of Legislative Decree no. 58/1998, of the offering to the Italian public involving 'Liracoins', carried out by 'Liracoin - DAMO', including via the websites https://liracoin.club, www.liracoin.com and 11www.licex.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 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 FOUND that the investigations undertaken by CONSOB revealed the existence on the web of the websites https://liracoin.club and www.liracoin.com, which promote the ‘Initial Coin Offering’ (‘ICO’) of ‘Liracoins’, in addition to the website www.licex.io that hosts the platform for the purchase of ‘Liracoins’;

HAVING FOUND that the websites https://liracoin.club www.liracoin.com also contain two PDF documents - a ‘whitepaper’ and ‘explanatory slides’, both available in Italian, which describe the scheme called ‘Liracoin Community’ and the launch of cryptocurrency in question;

HAVING FOUND that the websites www.liracoin.com and www.liracoin.com and the aformentioned PDF documents attribute the scheme to an entity called ‘Liracoin - DAMO’, a ‘blockchain distributed’ organisation;

HAVING FOUND that subscription to the scheme simply requires the investment of capital - in traditional currency or other cryptocurrency - to purchase Liracoins.

HAVING FOUND that interested investors can buy Liracoins via the websiteshttps://liracoin.club or www.liracoin.com or the exchange platform hosted on the website www.licex.io;

HAVING FOUND that the subscribers to the Community - i.e. owners of Liracoin - are promised the possibility of generating returns through the following mechanisms: the ‘LIC Stake Wallet’ (that generates returns in the Liracoin) and the "Smartdrop" (that generates returns in tokens called Lirafix);

HAVING FOUND, furthermore, that with the first system - LIC Stake Wallet - users are remunerated for the mere fact of having deposited the cryptocurrencies in their wallet, tying up these assets for at least 500 days and that the gains envisaged - from a maximum of 3% to a minimum of 0.25% per month - derive, according to the Whitepaper, both from the new Liracoins (the greater the number of Liracoins deposited, the greater the remuneration in Liracoins), and from the fluctuations in ‘nominal’ value of the Liracoin;

HAVING FOUND, moreover, that the additional remuneration method - the Smartdrop - for a deposit of 345 days and after signing up to packages that provide for different remunerations depending on the amount of deposits made, from a minimum of 0.174% to a maximum of 0.58% per day, would make it possible to obtain returns paid in Lirafix, which are internal tokens of the system that can be converted into Liracoin;

HAVING FOUND, moreover, that the holders of Liracoins - as members of the Community - are granted the right to vote on matters pertaining to the functioning and organisation of the Community;

HAVING FOUND that the same Whitepaper indicates that the volume of sales is equal to 60.801.176 Liracoins and that, in March 2018, the value of each coin was set at 0.80 dollars;

HAVING FOUND that the websites in question include ‘electronic buttons’ through which, subject to prior registration, subscribers can purchase Liracoins;

HAVING FOUND that "Liracoin - DAMO" has never provided a response to requests for information and documentary elements of the Writer;

HAVING CONSIDERED 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 offering 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. No. 58/1998 - both the “standardised” figures of "financial instruments” and “any 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 addressed to the Italian public;

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

HAVING CONSIDERED that the structure of the operation in question includes the following: (a) the subscriber must use his/her own capital (b) in order to obtain a return equal to a variable percentage of additional cryptocurrency, against capital invested by the investor - even in traditional currency - which (c) entails a potential financial risk;

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 FOUND 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 ‘Liracoin - DAMO’, based on the foregoing, appears to qualify as ‘an investment of a financial nature’;

HAVING FOUND, furthermore, that the https://liracoin.club and www.liracoin.com websites and the information documents that can be downloaded from these websites display 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 FOUND that the aforementioned websites and documents promote 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 websites in question, although not drafted in Italian, include a ‘Whitepaper’ and ‘explanatory slides’ written in Italian and fully intelligible; this is in addition to the organisation in Italy of events promoting the scheme in question;

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 ESTABLISHED, therefore, that the activity implemented by ‘Liracoin - DAMO’ to promote the Liracoin - via the three aforementioned websites a spart of a unitary scheme - 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 FOUND that, in relation to the activity implemented by ‘Liracoin - DAMO’, neither prior notification nor the information prospectus intended for publication were sent to CONSOB;

HAVING CONSIDERED CONSOB’s Resolution no. 20944 of 29 May 2019, with which pursuant to Art. 99, para. 1, letter b), of the Consolidated Law on Finance implemented the precautionary suspension of the offering of " Liracoin " made by " Liracoin - DAMO " to the public resident in Italy, for a period of ninety working days, also through the websites https://liracoin.club, www.liracoin.com and www.licex.io;

HAVING CONSIDERED that the “Liracoin – DAMO” 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 execution of financial products consisting of financial instruments to the public, in infringement of the rules referred to in the foregoing;

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 AS FOLLOWS:

It is forbidden for ‘Liracoin - DAMO’ to offer investments of a financial nature to the public resident in Italy, also through the websites https://liracoin.club, www.liracoin.com and www.licex.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 with the Regional Administrative Court of Lazio within 60 days from the date of notification.

July 31, 2019

THE CHAIRMAN
Paolo Savona