Resolution no. 21973

Prohibition, pursuant to article 99, paragraph 1, letter c) of Legislative Decree no. 58/1998, of the Initial Coin Offering (ICO) regarding the investment of a financial nature known as "Niwix tokens (NWX)" promoted by the company Niwix Limited, including through the website www.niwix.org

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, as subsequently amended and integrated; HAVING REGARD TO Legislative Decree no. 58 of 24 February 1998 (the "Consolidated Law on Finance");

HAVING ESTABLISHED that, as a result of Consob’s supervisory activities, the presence on the web was noted of the website www.niwix.org, in English, which promoted an Initial Coin Offering (ICO) for cryptographic tokens known as "Niwix tokens (NWX)";

HAVING ESTABLISHED that on the website www.niwix.org the aforementioned "NWX" was offered at a unit price of 1 euro and the total amount of the offer was set at 320,000,000 tokens, equal to 320,000,000 euro;

HAVING ESTABLISHED that the website www.niwix.org contained a document, entitled "Lightpaper", which described the rights included in the so-called "NWX" offered. More specifically, the "NWX" offered were linked to so-called "Niwix certificates", which were certificates that represent 3.5 metres of nickel wire each, offered at a unit cost of 100 euro. In order to purchase a certificate, the user would have to hold already 340 tokens and, upon the purchase of a certificate, the user was promised the transfer of 220 tokens. In addition, the "Niwix certificates" appeared to act as a guarantee of the investment in "NWX tokens" given that they entitled the use to claim the physical delivery of the underlying commodity (nickel wire), whose market price was allegedly higher than the cost of the certificate. Both the "NWX" tokens and the "Niwix certificates" were allegedly issued by the company, Niwix Limited, with registered office in London, that allegedly owned the nickel wire represented by the above certificates. Niwix Limited was then to use the funds collected as part of the offer of the "NWX" tokens and "Niwix certificates" to finance the activity carried out, in the field of raw materials, by investee companies, amongst which the British companies Ixellion Aeoronautic Ltd and Element De Terre Rare Ltd were specifically mentioned, as well as the company, Ultimate Investment House Fzc, with declared registered office in the United Arab Emirates. Niwix Limited was then to use a part of the profits generated by the activity of the investee companies both to pay profits to the owners of the "NWX" tokens and to repurchase the same tokens on the market at the unit price of 1 euro, in order to maintain the demand for and value thereof;

HAVING ESTABLISHED that, in addition to the above investment opportunity in "Niwix tokens/certificates", there was also the possibility of receiving revenue by carrying out an affiliation activity. Users registered with the website www.niwix.org were to receive referral links and invited to recruit new users to obtain additional profits;

HAVING ESTABLISHED that the website www.niwix.org redirected, by means of a special link, to the Twitter account of "Niwix", available on the address, https://twitter.com/_niwix, where the percentage of return on investment in "Niwix tokens/certificates" appeared to have been indicated as a maximum of 120% of the capital paid in;

HAVING ESTABLISHED that, in relation to the ICO described by "NWX" and the connected "Niwix certificates", the video entitled "Q&A 23 JAN 2021", available at https://www.youtube.com/watch?v=03eoR1uQj0M, has been identified on the YouTube channel;

HAVING ESTABLISHED that, in the above video "Q&A 23 JAN 2021", Roberto Diomedi, a former Director of Niwix Limited, provided information in Italian with reference, among other things, to the "Niwix" project;

HAVING ESTABLISHED that, in the above video "Q&A 23 JAN 2021", Mr. Diomedi also referred to chats of Italian groups, Italian networks and video tutorials in Italian, through which updates on the ICO of "NWX" were specifically to be provided to the Italian public;

HAVING ESTABLISHED that the operation involving "Niwix tokens/certificates", promoted by the company, Niwix Limited, was presented as an investment opportunity, given that potential customers were offered the possibility of using a sum of money to purchase tokens and certificates in order to receive periodic returns, which would then be paid proportionally to the capital paid in by customers. The promised returns would come from the profits produced by the activities of the investee companies, in the course of the activities allegedly carried out in the raw materials industry;

HAVING REGARD TO the fact that, according to the definition provided under article 1, paragraph 1, letter t) of the Consolidated Law on Finance a "public offering of financial products" must be understood to mean "any communication made to people, in any form and by any means, that presents sufficient information on the offer conditions and the financial products offered so as to render an investor capable of deciding to buy or subscribe the financial products including the placement through licensed parties";

WHEREAS the constituent elements of the public offer relevant for the purposes of the above provision can be summarised as follows:

a) the fact that the activity involves "financial products", a category that includes - pursuant to article 1, paragraph 1, letter u), of the Consolidated Law on Finance - both the "standard" features 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 underwrite 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 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) a promise/expectation of a return of a financial nature; (iii) the assumption of a risk directly connected and related to the investment of capital;

WHEREAS the structure of the transaction in question requires that (i) the participant uses its own capital (b) for the purpose of obtaining a predefined return, given as a percentage and calculated on the capital contributed by the investor which (c) entails a potential financial risk;

HAVING ESTABLISHED that the above return would be paid by Niwix Limited against the use of the investor’s capital, and that it would be related exclusively to the amount paid, given that the user was not asked to undertake any activity other than the contribution of capital alone;

WHEREAS the legal reason for the negotiating proposal 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 a profit, namely, the increase in the cash invested;

CONSIDERING, therefore, that, with regard to the existence of the requirement referred to by letter a), namely, that the offering in question may be classified as a "financial product", the investment offered by Niwix Limited based on the above, qualifies as an "investment of a financial nature";

HAVING ESTABLISHED that the initiative in question is promoted in standardised and uniform terms, through a presentation that contains a representation of the features of the investment scheme that is such as to place investors in a position to decide whether or not to participate in the actual initiative, but without the possibility for an individual investor to intervene in drawing up the contractual agreement;

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

HAVING ESTABLISHED that the offer promoted through the website www.niwix.org is also addressed to Italian investors, given that registration to the site is also permitted to users connected from Italy and a video in Italian has been found online in which Roberto Diomedi, a former Director of Niwix Limited, promotes the offer in question; moreover, in the video, specifically dedicated to the Italian public, reference is made to additional information channels reserved to Italian investors;

HAVING ESTABLISHED that a sales scheme was also promoted through the aforementioned 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 forth by letter c) is met, given that the offering in question is addressed to the public resident in Italy;

CONSIDERING, therefore, that the activity carried out by Niwix Limited to promote investments of a financial nature has the characteristics of a public offering of financial products as defined above;

HAVING REGARD TO article 94-bis, paragraph 1 of the Consolidated Law on Finance, pursuant to which "Anyone intending to make an offer to the public of financial products other than open-ended units or shares of UCITS must publish a prospectus in advance. To this end, an application must be submitted to Consob for approval, with the draft attached. The prospectus cannot be published until it has been approved by Consob pursuant to article 95, paragraph 1, letter b)";

HAVING ESTABLISHED that, in relation to the activity described, the information prospectus intended for publication has not been sent to Consob;

HAVING ALSO ESTABLISHED that, based on current evidence, the offering in question does not fall under any of the exemptions - contemplated by the combined provisions of articles 100 of the Consolidated Law on Finance and 34-ter of Consob Regulation no. 11971/98 - relevant to the application of the rules on "solicitation of public savings";

HAVING REGARD to Consob Resolution no. 21853 of 19 May 2021, whereby, pursuant to article 99, paragraph 1, letter b), of the Consolidated Law on Finance, Consob implemented the precautionary suspension measure, for a period of ninety days, of the offer to citizens residing in Italy involving an investment of a financial nature promoted by Niwix Limited even through the website www.niwix.org;

WHEREAS Niwix Limited has sent no objections in response to the facts on which the suspension measure is based;

WHEREAS, therefore, in the light of the investigation outlined above and in the absence of any evidence to suggest a situation other than the case outlined in the aforementioned suspension measure, the circumstances de facto and de jure established in said precautionary suspension measure of the above Resolution for a precautionary suspension measure, are considered to have been ascertained;

CONSIDERING, therefore, that it has been ascertained that - according to the methods described above and noted when the above precautionary suspension measure was adopted - an offering to the public was made of financial products, in a sub-category of "investments of a financial nature" in breach of the above law;

HAVING REGARD to article 99, paragraph 1, letter c) of the Consolidated Law on Finance, pursuant to which Consob may: "prohibit the offering if a violation is confirmed of the provisions of this Chapter or of the related implementation measures and of the Prospectus Regulation and implementing measures, or if there are well-founded suspicions that such provisions or measures might be breached";

RESOLVES:

That the activity of offering investments of a financial nature to the public resident in Italy set up by Niwix Limited even through the websitewww.niwix.org. is prohibited.

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.

28 July 2021

THE CHAIRMAN
Paolo Savona