(*) Mindcapital Oü appealed to the Administrative Court of Lazio on 20.10.2020 against this resolution.

Resolution no. 21456

Suspension, pursuant to article 99, paragraph 1, letter b) of Legislative Decree no. 58/1998, of the public offering concerning investments of a financial nature made by Mindcapital Oü through the https://mind.capital 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 7 June 1974 and subsequent amendments and supplements;

HAVING REGARD TO Legislative Decree no. 58 of 24 February 1998 (‘Consolidated Law on Finance’) and subsequent amendments and supplements;

HAVING ESTABLISHED that, as a result of Consob’s supervisory activity, the presence was noted on the web of the https://mind.capital website, the contents of which are also available in Italian, and which can be traced to Mindcapital Oü, with its registered address at Tallinn (Estonia);

HAVING ESTABLISHED that the above website states that “mind.capital’” allegedly constitutes “a high yield system within everyone's reach [...] a revolutionary way of obtaining returns from cryptoassets” in which “any person, starting with a purchase of 40 MCcoins, can participate in the returns”.

HAVING ESTABLISHED, in particular, that the site states that "to register, all you need to do is fill in the registration form" - the latter, which is also available to Italian users, is "free of charge, you just need to be recommended" - access the "administration panel, click on make a purchase and select the amount starting from 40 MCoins": in this way, “right from the start [the user] will begin to receive the returns obtained the previous day in [his/her] account on a daily basis ". In addition, with reference to "MCcoins", the site states that:

- "1 MCcoin = 1 USD",

- "MCcoin is our token for internal use only."

- the user is required to purchase a quantity of “MCcoins” between 40 and 100,000 “MCcoins",

HAVING ALSO ESTABLISHED that in the "frequently asked questions" section of the site it states: "what does mind.capital invest in? [...] we permanently monitor and analyse the trend of thousands of cryptoassets and their exchange rate in different currencies and, through the use of advanced algorithms, we find buy/sell opportunities in real time. Depending on the moment in time we can operate in several cryptoassets simultaneously or only in some or in none. The value of our system lies in knowing which cryptoassets, which currencies and when to buy or sell;

HAVING ESTABLISHED that the site states that "the platform distributes the benefits obtained the previous day on a daily basis" and it also specifies that "every day we distribute the gains obtained during the previous day among the participants, from which mind.capital subtracts 35% for management and maintenance expenditure". In particular, in the "Frequently Asked Questions” section of the https://mind.capital website, it states that "profitability is paid daily in dollars to each investor's account (except on weekends and holidays)";

HAVING ESTABLISHED that in addition to the above investment opportunities there is also the possibility of receiving extra bonuses, linked to an affiliation scheme called “Plan de referidos y bono amigo”;

HAVING ALSO ESTABLISHED that the company has not provided any response to the requests for information made by Consob;

HAVING ESTABLISHED that the structure of the transaction is presented as an investment opportunity, as the initiative promoted by Mindcapital Oü would appear to offer users the possibility of using a sum of money to purchase a quantity of “MCcoins” and receive the periodic returns that are allegedly paid daily by Mindcapital Oü and allegedly consist of a percentage of the profits obtained by Mindcapital Oü from the purchase and/or sale of currencies (crypto and fiat money) that Mindcapital Oü claims it carries out;

WHEREAS according to the definition under Art. 1, para. 1, letter t) of the Consolidated Law on Finance, a "public offering [of financial products]” ) ” must be understood to mean ““any invitation to offer or promotional message, in whatsoever form addressed to the public, whose objective is the sale or subscription of financial products including the allocation through authorised people;”

WHEREAS 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 a communication intended to persuade investors to purchase or subscribe one or more specific financial products and, consequently, including at the very least a description of their essential characteristics and conditions;

c) the fact that the offering 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) an expectation of return of a financial nature; (iii) the assumption of a risk connected to the investment of capital;

WHEREAS the structure of the transaction in question envisages that (a) the user employs his/her own capital to purchase a quantity of between 40 and 100,000 “MCcoins” (b) by virtue of the aforesaid purchase he/she is given the opportunity to achieve a return determined as a percentage of the profits achieved by “Mind.capital” (c) with the consequent assumption of a risk related to the use of the capital entrusted;

HAVING ESTABLISHED, therefore, that the aforementioned return would be paid against the use of the investor’s capital, and that the return is related to the amount paid and that the user is not asked to undertake any activity other than the mere contribution of capital;

WHEREAS, consequently, the legal reason for the contract in question 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 profit, namely, the increase in the cash invested;

WHEREAS therefore, with regard to the existence of the requirement referred to in letter a), namely, that the offering in question can be classified as a "financial product", the investment considered, based on the foregoing, qualifies as an "investment of a financial nature";

HAVING ESTABLISHED that the initiative referred to is alleged to have been promoted in standardised and uniform terms, through a presentation of the initiative that contains a representation of 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, therefore, that the requirement set out under letter b) is also met;

HAVING ESTABLISHED that the offering made through the https://mind.capital website is ongoing and also directed at Italian investors, as the site is also available in Italian and moreover it is possible for users connecting from Italy to register on the site.

HAVING ESTABLISHED, moreover, that a sales scheme is also promoted through the abovementioned websitewhich offers a user the possibility of earning 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;

HAVING ESTABLISHED, therefore, that the initiative set up by Mindcapital Oü through the https://mind.capital website seems to constitute a public offering of financial products as defined above;

WHEREAS Article 94, paragraph 1 of the Consolidated Law on Finance states: "Persons who intend to make a public offering shall give advance notice thereof to CONSOB, attaching the prospectus to be published. To this end, for offerings to the public of EU financial instruments for which Italy is the Home State, and for offerings of financial products other than EU financial instruments, they shall give advance notice thereof to Consob, attaching the prospectus to be published. 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 ESTABLISHED that, based on current evidence, the offering in question does not appear to fall into any of the exemptions - contemplated by the combined provisions of article 100 of Legislative Decree no. 58/98 and article 34-ter of Consob Regulation no. 11971/98 - from enforcement of the rules on "solicitation of public savings";

WHEREAS, therefore, there is a well-founded suspicion of the promotion of a public offering of financial products in breach of that legislation and the public offering of the financial products in question is still ongoing;

HAVING REGARD to Article 99, paragraph 1, letter b) of the Consolidated Law on Finance, on the basis of which Consob: "may suspend the public offering as a precautionary measure for a maximum of ninety days of products other than those specified under letter a) [i.e., Community financial instruments] in the event of a well-founded suspicion of violation of the provisions of this chapter or the related regulations”;

WHEREAS, given the existence of the above conditions, there is an urgent need to adopt the measure identified above;

RESOLVES:

That the activity of offering to the public resident in Italy set up by Mindcapital Oü through the https://mind.capital website, is suspended, as a precautionary measure, for a period of 90 days.

This Resolution shall be brought to the attention of the person with whom it is concerned 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 23, 2020

THE CHAIRMAN
Paolo Savona